Principles of Microeconomics 6th Edition By N. Gregory Mankiw – Test Bank

a.

the extent to which advances in technology are adopted by producers.

b.

the extent to which a market is competitive.

c.

how firms’ profits respond to changes in market prices.

d.

how much buyers and sellers respond to changes in market conditions.

a.

a measure of how much buyers and sellers respond to changes in market conditions.

b.

the study of how the allocation of resources affects economic well-being.

c.

the maximum amount that a buyer will pay for a good.

d.

the value of everything a seller must give up to produce a good.

a.

equity effects on the market by identifying the winners and losers.

b.

magnitude of the effect on the market.

c.

speed of adjustment of the market in response to the event or policy.

d.

number of market participants who are directly affected by the event or policy.

a.

government expenditures associated with the policy.

b.

costs and benefits of the effect.

c.

allocative efficiency of the effect.

d.

direction and magnitude of the effect.

a.

Elasticity allows us to analyze supply and demand with greater precision than would be the case in the absence of the elasticity concept.

b.

Elasticity provides us with a better rationale for statements such as “an increase in x will lead to a decrease in y” than we would have in the absence of the elasticity concept.

c.

Without elasticity, we would not be able to address the direction in which price is likely to move in response to a surplus or a shortage.

d.

Without elasticity, it is very difficult to assess the degree of competition within a market.

a.

reduce their quantity demanded more in the long run than in the short run.

b.

reduce their quantity demanded more in the short run than in the long run.

c.

do not reduce their quantity demanded in the short run or the long run.

d.

increase their quantity demanded in the short run but reduce their quantity demanded in the long run.

a.

6 percent after one year and 2.5 percent after five years.

b.

2.5 percent after one year and 6 percent after five years.

c.

10 percent after one year and 20 percent after five years.

d.

0 percent after one year and 1 percent after five years.

a.

About 10 percent of the long-run reduction in quantity demanded arises because people drive less and about 90 percent arises because they switch to more fuel-efficient cars.

b.

About 90 percent of the long-run reduction in quantity demanded arises because people drive less and about 10 percent arises because they switch to more fuel-efficient cars.

c.

About half of the long-run reduction in quantity demanded arises because people drive less and about half arises because they switch to more fuel-efficient cars.

d.

Because gasoline is a necessity, consumers do not decrease their quantity demanded in either the short run or the long run.

a.

quantity demanded responds to a change in price.

b.

quantity demanded responds to a change in income.

c.

price responds to a change in demand.

d.

demand responds to a change in supply.

a.

buyers’ responsiveness to a change in the price of a good.

b.

the extent to which demand increases as additional buyers enter the market.

c.

how much more of a good consumers will demand when incomes rise.

d.

the movement along a supply curve when there is a change in demand.

a.

consumers to buy less of the good as price rises.

b.

consumers to avoid monopolistic markets in favor of competitive markets.

c.

firms to produce more of a good as price rises.

d.

firms to respond to the tastes of consumers.

a.

The price elasticity of demand for a good measures the willingness of buyers of the good to buy less of the good as its price increases.

b.

Price elasticity of demand reflects the many economic, psychological, and social forces that shape consumer tastes.

c.

Other things equal, if good x has close substitutes and good y does not have close substitutes, then the demand for good x will be more elastic than the demand for good y.

d.

All of the above are correct.