Elasticity and Incentives Answers
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What is the difference between a price floor and a price ceiling?
A
A price floor is the minimum price allowed for a good. A price ceiling is the maximum price allowed for a good.B
A price floor is the maximum price allowed for a good. A price ceiling is the minimum price allowed for a good.C
A price ceiling below the equilibrium price has no effect.D
A price floor above the equilibrium price has no effect.2
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Tasty Treat Tea is a popular iced tea drink. When the manufacturer begins to use imported tea leaves, the price rises by 10%, and the quantity demanded falls by 20%.The fact that quantity demanded changed by more than the price change suggests that
A
The consumer no longer prefers the iced tea drink.B
The demand for Tasty Treat Tea is elastic.C
The demand for Tasty Treat Tea is inelastic.D
The consumer no longer shops at Tasty Treat Tea.3
Which is an example of a negative incentive for producers?
A
a chance to make more moneyB
a special sale at a department storeC
a coupon clipped from a newspaperD
a sharp increase in production costs4
In economics, if a good is inelastic,
A
consumers have lost an interest in purchasing it.B
producers have lost an interest in manufacturing it.C
its supply or demand is too sensitive to price changes.D
its supply or demand is not sensitive to price changes.5
The graph shows the price of green tea compared to the amount supplied by producers.What does this graph suggest about green tea? Choose two answers.
A
Green tea is elastic in terms of supply.B
Green tea is inelastic in terms of supply.C
Green tea is neither elastic nor inelastic.D
The supply of green tea changes sharply with the price.E
The quantity supplied of green tea does not change sharply with the price.Did you find these answers helpful?
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