Elasticity and Incentives

Question 1

In the market, actions known as incentives affect

Revolt · Accepted Answer

consumers or producers.

Question 2

The lowest amount a manufacturer can pay factory workers is an example of

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a price floor.

Question 3

The government has set a price floor on bread. Manufacturers cannot sell loaves for less than $5.00, which is a dollar above the market price. What will most likely result from this price control?

Revolt · Accepted Answer

The quantity demanded for bread will decrease, and the quantity supplied will increase.

Question 4

Which is an example of a negative incentive for producers?

Revolt · Accepted Answer

a sharp increase in production costs

Question 5

A reward or punishment that encourges people to behave in a certain way is called a(n)

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incentive.

Question 6

Which statement best explains how elasticity and incentives work together?

Revolt · Accepted Answer

An elastic good, such as a game, is more likely to respond to incentives.

Question 7

best

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Incentives can be positive or negative.

Question 8

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 9

In economics, if a good is inelastic,

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its supply or demand is not sensitive to price changes.

Question 10

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.

Elasticity and Incentives Answers

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