13. In the short-term oil market, what is supply and demand? a. both rubber bands b. both inelastic c. demand is elastic and supply is inelastic d. demand is inelastic and supply is elastic 14. Why do Werther’s original sweets tend to have elastic demand? a. because the candy market is very large b. because there are many close substitutes for Werther’s c. because Werther’s original sweets are seen by some as a necessity d. because it is usually consumed quickly and therefore the time horizon is short 15. If the price elasticity of demand for a good is 4.0, what would result from a 10% price increase? a 4% decrease in quantity demanded b. a 10% decrease in quantity demanded a 40% decrease in quantity demanded d. a 400% decrease in quantity demanded 16. If a demand curve is vertical, what is its slope and elasticity? a. indefinite and elasticity equal to 0 b. The elasticity and is indefinite c. indefinite, as well as elasticity d. 0, as well as the elasticity at C.
Answer 1
Answer 13: (d) demand is inelastic and supply is elastic. This one
because there are very few substitutes for fossil fuels,
demand is relatively inelastic. But most providers are
OPEC members, and they can easily alter the supply to
manipulate prices.
Answer 14: (b) because there are many close substitutes for
of Wether. This means that if Werther’s price changes even
by a small unit, then there will be a big change in the quantity
necessary, as consumers have many other options.
Answer 15. (c) a 40% decrease in quantity requested.
Elasticity is the percentage change in quantity divided by the percentage change
in price. So 4 = percentage change in quantity divided by 10.
So percentage change in quantity = 4*10 = 40%
lessen.
Answer 16: (d) 0, plus elasticity. The slope of any vertical
the line is 0 and the elasticity is also 0 because a vertical demand curve
means that the quantity demanded will remain the same, regardless of the
prices.