EXAM II ECON 130 Review

Demand or supply curve that is close to vertical is ____.

• income elasticity

• elastic

• unitary elasticity

• inelastic

When demand is inelastic, which of the following is true?

• A) consumers are not very responsive to changes in price

• B) price elasticity of demand is greater than 1.

• C) the % change in quantity demanded is greater than the % change in price

• D) demand curves appear to be fairly flat.

The longer the time period considered, the more the elasticity of supply tends to:

• decrease

• remain constant

• increase

• converge to zero

If cola and iced tea are good substitutes for consumers, then it is likely that:

• A) their cross price elasticities are greater than zero.

• B) their income elasticities are less than zero.

• C) their price elasticities of demand are less than one.

• D) their price elasticities of supply are less than one.

If the supply curve for housing is perfectly inelastic, then a reduction in demand will cause the equilibrium price to:

• rise and the equilibrium quantity to fall.

• rise and the equilibrium quantity to stay the same.

• fall and the equilibrium quantity to fall.

• fall and the equilibrium quantity to stay the same.

________ are rare in labor markets, because rules that prevent people from earning income are not politically popular.

• minimum wages

• price floors

• price ceilings

• living wage laws

Other things being equal ​ ____ , a supply of workers tends to ​ ____ real wages.

• smaller, not change

• larger, increase

• smaller, decrease

• larger, decrease

Whenever there is a surplus at a particular price, the quantity sold at that price will equal:

• (quantity demanded plus quantity supplied)/2.

• the quantity demanded at that price.

• the quantity supplied at that price.

• the quantity supplied minus the quantity demanded.

Which of the following results in a rightward shift of the market demand curve for labor?

• a decrease in labor productivity

• a decrease in the firm's product price

• an increase in demand for the firm's product

• an increase in the wage rate

A straightforward example of a , often used for simplicity, is the interest rate.

• price ceiling

• rate of return
• financial investment

• price floor