Which of the two goods is more likely to be elastically supplied? *

a. Supply of apples over the next growing season

b. Supply of apples over the next decade

Which of the two goods is more likely to be elastically supplied? *

a. Supply of construction workers in Binghamton, NY

b. Supply of construction workers in New York State

Which of the two goods is more likely to be elastically supplied? *

a. Supply of breakfast cereal

b. Supply of food

Which of the two goods is more likely to be elastically supplied? *

a. Supply of gold

b. Supply of computers

If a new process for manufacturing diamonds is created, will the supply curve for diamonds become more elastic or more inelastic? *

a. More elastic

b. More inelastic

If pesticides and fertilizers are banned, will the supply curve for food become more elastic or more inelastic? *

a. More elastic

b. More inelastic

If a larger share of oil output is required to make plastic, will the supply curve for plastic become more elastic or more inelastic? *

a. More elastic

b. More inelastic

In 1993, then President Clinton passed a law raising income taxes. This tax hike was fully expected: He campaigned on it in 1992. What do you expect happened to executive income in the first year of the tax increases? What about in subsequent years? Hint: Top executives have a lot of power over when they get paid for their work: They can ask for bonuses a bit earlier, or they can cash out their stock options a bit earlier. Literally, this isn’t their “labor supply,” it’s more like their “income supply.” *

a. In the first year income will decrease; in the long run it will decrease

b. In the first year income will decrease; in the long run it will remain nearly the same

c. In the first year income will increase; in the long run it will decrease

d. In the first year income will increase; in the long run it will remain nearly the same

Economist Austen Goolsbee estimated that the short-run elasticity of “income supply” for these executives was 1.4, while the long-run elasticity of “income supply” was 0.1. (Note: Goolsbee used a variety of statistical methods to look for these elasticities, and all came to roughly the same result.) If taxes pushed down their take-home income by 10%, how much would this cut the amount of income supplied in the short run? In the long run? *

a. Short run income would decrease 10%; long run income would decrease 1%

b. Short run income would decrease 14%; long run income would decrease 1%

c. Short run income would decrease 10%; long run income would decrease 2%

d. Short run income would decrease 14%; long run income would decrease 2%