Elasticity and Incentives

Question 1

The graph shows the price of a good compared to the quantity demanded and the quantity supplied.On this graph, what does the green arrow represent?

Revolt · Accepted Answer

an effective price ceiling set below equilibrium causing a shortage.

Question 2

In the market, actions known as incentives affect

Revolt · Accepted Answer

consumers or producers.

Question 3

Price controls on goods can be set by

Revolt · Accepted Answer

governments.

Question 4

A consumer might respond to a negative incentive by

Revolt · Accepted Answer

decreasing use of the product to save money.

Question 5

Which is an example of a negative incentive for producers?

Revolt · Accepted Answer

a sharp increase in production costs

Question 6

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

Revolt · Accepted Answer

The demand for Tasty Treat Tea is elastic.

Question 7

best

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Incentives can be positive or negative.

Question 8

Goods that are considered to be needs tend to be

Revolt · Accepted Answer

inelastic when the price changes.

Question 9

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.Green tea is elastic in terms of supply.Green tea is inelastic in terms of supply.Green tea is neither elastic nor inelastic.The supply of green tea changes sharply with the price.The quantity supplied of green tea does not change sharply with the price.

Question 10

A pair of stylish sneakers could be considered a because it is not a necessity.

Revolt · Accepted Answer

want

Elasticity and Incentives Answers

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