$5.90
ECON 213 Quiz 4 Elasticity solutions complete answers
ECON 213 Quiz 4 Elasticity solutions complete answers
When quantity demanded and price increase by 10%, you know that price and quantity are ________ to the consumer.
Cellphone companies found that when they raised the price of connecting to wireless hot spots, demand decreased more than proportionally among casual users but decreased less than proportionally among businesspeople. This is because wireless connectivity is a(n) ________ for casual users but a(n) ________ for businesspeople.
The percentage change in price is 5%, while the price elasticity of supply is 0. The percentage change in quantity supplied:
The city of Barlow is known for its wide variety of ice cream shops. What will happen if Nick’s Ice Cream Palace raises the price of its ice cream cones?
A firm knows that Mike’s income elasticity of demand for hair ties is 5 while for Sally it is 0.2. A firm can reason that a hair tie is a(n) ________ good for Mike while it is a(n) ________ good for Sally.
If the income elasticity of demand for good smartphone apps is 5 and the percentage change in income is 10%, what is the percentage change in the quantity consumed?
The price elasticity supply of doctors could be considered ________ because it takes a minimum of four to six years of training to be able to work as a physician.
If the price elasticity of supply is 1.5, we know that supply is:
Use the following scenario to answer the questions that follow:
Dairy Dream, a local ice cream store, finds that it sells out of ice cream sandwiches at the current price of $1. It raises the price to increase its revenues and finds that no one buys ice cream sandwiches anymore.
The owners raised the price because they believed that the demand for ice cream sandwiches is:
Price elasticity of demand measures the change in:
What good is most likely to have an income elasticity of demand equal to 8?
A 15% increase in the price of cookies results in a 9% decrease in the quantity of cookies sold. The revenue received by cookie suppliers will ________ because the price elasticity of demand for cookies is ________.
If the cross-price elasticity of demand is –5, Good A and Good B are:
If the income elasticity of demand for a good is 1.2, the good will be a(n):
Winged Wonders is a specialty store that sells butterfly ornaments. The owner wants to increase her total revenue and knows that the price elasticity of demand for her product is –0.4. What should she do to her price?
If the price elasticity of supply is 2.5, we know that it is:
From the accompanying table, we can see that the demand curve for ice skates by hockey players will be ________ the demand curve for recreational skaters.
· Question 1
2 out of 2 points
Use the following scenario to answer the questions that follow: Dairy Dream, a local ice cream store, finds that it sells out of ice cream sandwiches at the current price of $1. It raises the price to increase its revenues and finds that no one buys ice cream sandwiches anymore. The demand for ice cream sandwiches is:
· Question 2
2 out of 2 points
When the price increases by 30% and the quantity demanded drops by 30%, the price elasticity of demand is:
· Question 3
2 out of 2 points
Chris runs a sporting goods store and knows that the price elasticity of demand for his sports clothing line is –1.5. He is planning to lower prices by 10%. The percentage change in quantity demanded will be:
· Question 4
2 out of 2 points
From the accompanying table, we would expect that, for recreational skaters, the price elasticity of demand for ice skates between $10 and $20 to be ________ than that of hockey players because ________.
· Question 5
2 out of 2 points
The Sunny Softball league found that, when it changed its ticket prices from $10 to $5, there was a more than proportional but not infinite increase in attendance. The price elasticity of demand is:
· Question 6
2 out of 2 points
The income elasticity of demand for a good measures the responsiveness of ________ to a change in ________.
· Question 7
2 out of 2 points
Nita is a devoted Coca-Cola consumer, whereas Becky can drink either Coca-Cola or Pepsi products. Nita’s demand for Coca-Cola will be relatively more ________, while Becky’s demand will be relatively more ________.
· Question 8
2 out of 2 points
If the cross-price elasticity of demand is 6, Good A and Good B are:
· Question 9
2 out of 2 points
When Clayton starts working at his first full-time job out of college with a $60,000 salary, he is likely to buy more ________ and less ________.
· Question 10
2 out of 2 points
You are given a list of income elasticity of demand values. Which one represents a necessity?
· Question 11
2 out of 2 points
The introduction of new gaming systems that can compete effectively with the Nintendo console will make the demand for the Nintendo console become:
· Question 12
2 out of 2 points
The reason that Darren buys a lot more paintings when the price of art falls is that:
· Question 13
2 out of 2 points
Robert’s Furniture produces high-quality wooden bedroom sets that take approximately 4 months to make, from start to finish. The price elasticity of supply for these bedroom sets in the short term is:
· Question 14
2 out of 2 points
What good is most likely to have a negative income elasticity of demand?
· Question 15
2 out of 2 points
Consider two labor markets. In the first, the elasticity of supply is relatively elastic, while it is relatively inelastic in the latter. Imposing a minimum wage in each market would result in ________ unemployment in the first market and ________ unemployment in the second.
When the price is the equilibrium price, we would expect there to be a causing the market to put pressure on the price until it went back to the equilibrium price.
Suppose that Dwight and Jim can either make salads or grill steaks. Their maximum output per hour is listed in the following table. Given the same quantity of resources, at what terms of trade (relative price ratio) could they specialize and trade so that both consume outside their own production possibilities frontier (PPF)?
What would you expect to happen to the price of bagels if the price of flour decreased and the price of cream cheese decreased?
To determine which of two producers has a comparative advantage, you would need to know their
The area inside (within) the production possibilities frontier (PPF) contains
Economics professors are well aware of the importance of incentives. Which of the following situations shows the use of a positive incentive
Which one of the following pairs of goods is likely to have a negative cross-price elasticity of demand
The accompanying figures depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between making pizzas and making stromboli. If Jim and Pam were to specialize and trade, at what exchange rate would they find some quantity of trade to be mutually beneficial?
Use the following table to answer the questions that follow. What is the surplus when the price floor is $0.75 in the market for public transportation?
Why are binding price ceiling laws passed?
The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between building wooden boats and solving crimes. Refer to these figures to answer the questions that follow. Which statement best describes absolute advantage?
Which of the following will cause a movement along a good’s supply curve?
What would happen in the market for SUVs if the government started to subsidize the production of SUVs that get very few miles per gallon and the price of gasoline went up?
If the percentage change in the quantity consumed of pizza is 8% and the percentage change in income is 2%, what is the income elasticity of demand for pizza?
If the price and quantity for a normal good, Good X, is $8 and 6 units at the original equilibrium, what is one possibility for the new equilibrium of Good X if we see income increase and all other factors stay constant?
Chris runs a sporting goods store and knows that the price elasticity of demand for his sports clothing line is –1.5. He is planning to lower prices by 10%. The percentage change in quantity demanded will be
If the cross-price elasticity of demand for two goods is zero, the two goods are
The price of peanut butter increases from $2.50 to $3.00 and the quantity of jelly demanded falls from 30 jars to 24 jars. Calculate the cross-price elasticity of demand
During the winter months, many elderly persons leave their homes in northern New York and travel south to Florida or Arizona. What would you expect to happen to the equilibrium price and quantity of items most used by the elderly in northern New York?
When Heavenly Cookies prices its sugar cookies at $1.00, they sell 75 cookies. They lowered the price to $0.50 and sold 200 cookies. Their total revenue because the price elasticity of demand for sugar cookies is
For a market to be competitive
If a good is subject to a binding price ceiling and you purchase it on the black market, what do you expect to happen to the price over time?
Use these production possibilities frontier (PPF) curves, which compare the ancient production of agricultural products to art and literature, to answer the questions that follow. Suppose a great plague wipes out half of the society’s population. Which of the following graphs best depicts how this would affect the PPF?
In the first few months of 2012, the price of gasoline increased by approximately 15%. Because of this increase, we would expect the curve in the market for hybrid cars to
An increase in general resources that affects the production of both goods on a production possibilities frontier (PPF) would cause an
Use the following scenario to answer the questions that follow: Dairy Dream, a local ice cream store, finds that it sells out of ice cream sandwiches at the current price of $1. It raises the price to increase its revenues and finds that no one buys ice cream sandwiches anymore.
While there are many pizza places in Curtisville, Pappy’s Pizza is known for its distinctive deep-dish pizza with an almost pie-like crust, whereas Momma’s Pizza Pizzazz is comparable to many other restaurants. Pappy’s is likely to find that it can prices to increase total revenue, and Mommas must prices to increase total revenue.
The scientific method and the tools of economics are useful in examining
A positive statement
When the price of a basketball is $15, the quantity supplied is 5,000. When the price increases to $20, the quantity supplied is 10,000. The price elasticity of supply is
Which of the following will cause the demand curve for burgers to shift the right?
You have an absolute advantage in producing something whenever
From the accompanying table, we would expect that, for recreational skaters, the price elasticity of demand for ice skates between $10 and $20 to be than that of hockey players because
Refer to the accompanying figure. What event would cause the supply curve to shift out?
The production possibilities frontier (PPF) shows
With no barriers to entry or exit and when firms in a market are operating at a loss, you can expect other firms to exit, causing the curve to shift to the and making the equilibrium price and the equilibrium quantity
Google has started a project to scan all books and make those that are not copyrighted available to people free of charge. Why is it important that only books without a copyright are available?
According to economists, one reason few professional athletes have PhD’s is that the
What will happen in a market where a binding price floor is removed?
What would you expect to happen to the price and quantity of Pepsi if the price of Coke increases and Pepsi develops a new technology that makes its production process more efficient?
Which statement best describes the absolute advantage as shown in the graphs?
The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between building wooden boats and solving crimes. Refer to these figures to answer the questions that follow. What is DiNozzo’s opportunity cost for solving a crime?
Ceteris paribus, if a society is producing at a point on the production possibilities frontier (PPF), it can only increase the production of one good by
In the accompanying table, assume that the price of ice skates increases from $10 to $20 per pair. Using the midpoint method, calculate the price elasticity of demand for ice skates for hockey players.
Refer to the following figure for the questions that follow. As you move from points N to M to L, the opportunity cost of additional apple pie
Assume that the market for pencils is in equilibrium and that demand is very price elastic. The popularity of digital tablets and electronic pens increases and demand for pencils declines. The equilibrium change in quantity demanded is
Refer to the accompanying figure. When the price changes from P1 to P2, we will see a(n)
Use the following scenario to answer the questions that follow. Dairy Dream, a local ice cream store, finds that it sells out of ice cream sandwiches at the current price of $1. It raises the price to increase its revenues and finds that no one buys ice cream sandwiches anymore. The owners raised the price because they believed that the demand for ice cream sandwiches is
Spam is considered an inferior good. What would happen to the equilibrium price and quantity of Spam if income decreased and more firms started producing Spam?
Refer to the accompanying table to answer the questions that follow. The price of erasers increases from $0.50 to $1.00 per eraser. Use the midpoint method to calculate the cross-price elasticity of demand between pencils and erasers
1. If the income elasticity of demand for laptops is 3.5, you know that laptops are a(n):
a. substitute good.
b. inferior good.
c. luxury good.
d. necessity good.
e. complement good.
2. If the income elasticity of demand for noodles is 2 and the percentage change in the quantity consumed is 5%, what is the percentage change in income?
a. 2.5%
b. 10%
c. 2.5%
d. 10%
e. 0.4%
3.When Sue received a promotion at work, her income rose by 50%. The income elasticity of demand for steak was found to be 1.5. For her, steak is a(n):
a. inferior good.
b. necessity.
c. complement to potatoes.
d. substitute for chicken.
e. luxury.
4. When you change your quantity demanded of one good because of a change in price of another good, you are acting according to the principle of:
a. price elasticity of demand.
b. cross-price elasticity of demand.
c. income elasticity of demand.
d. price elasticity of supply.
e. income elasticity of supply.
5.If the percentage change in quantity demanded of Good B is 2% and the percentage change in the price of Good A is 10%, what is the cross-price elasticity of demand?
a. 0.20
b. 5
c. 1
d. 5
e. 0.20
6. A local sandwich shop can quickly place an order for food with its local vendors if it uses up its existing resources quickly. This indicates that the price elasticity of supply is:
a. unitary elastic.
b. perfectly elastic.
c. perfectly inelastic.
d. relatively elastic.
e. relatively inelastic.
7. Refer to the accompanying figure. At what price would there be the least pressure to form a black market?
a. $5
b. $8
c. $13
d. $15
e. $20
8. What is the long-run consequence of a price ceiling law?
a. A surplus will continue to exist and will grow larger over time.
b. A surplus will continue to exist and will grow smaller over time.
c. A shortage will continue to exist and will grow larger over time.
d. A shortage will continue to exist and will grow smaller over time.
e. The amount of the surplus will not change.
9. Refer to the accompanying figure, which shows both short-run and long-run demand and supply curves. If there is a $4 binding price ceiling imposed on a pharmaceutical drug, what will be the amount of the disequilibrium in the short run?
a. There will be a shortage of 1,500,000 units.
b. There will be a shortage of 800,000 units.
c. There will not be a shortage; there will be a surplus.
d. There will be a shortage of 2,000,000 units.
e. There will be a shortage of 500,000 units.
10. If the local government tells gas stations that they are not allowed to change the price of gas for three weeks during hurricane season, what will be the consequence?
a. Gas stations will be unable to sell all the gas they want at the temporary price ceiling price.
b. Consumers will be unable to buy all the gas they want at the temporary price ceiling price.
c. The supply curve for gas will increase and shift to the right.
d. The demand curve for gas will increase and shift to the right.
e. Equilibrium in the gas market will be achieved.
Refer to the accompanying figure for the next two questions.
11. The accompanying figure describes the market for gasoline in a local community. If the government were to place a price floor at P1, predict the resulting surplus or shortage.
a. There would be a shortage of 75,000 units.
b. There would be a surplus of 75,000 units.
c. There would be neither a shortage nor a surplus.
d. There would be a shortage of 150,000 units.
e. There would be a surplus of 150,000 units.
12. The accompanying figure describes the market for gasoline in a local community. If the government were to place a price floor at P3, predict the resulting surplus or shortage.
a. There would be a shortage of 75,000 units.
b. There would be a surplus of 75,000 units.
c. There would be neither a shortage nor a surplus.
d. There would be a shortage of 150,000 units.
e. There would be a surplus of 150,000 units.
13. As the time frame shifts from the short run to the long run, what happens to producers who are subject to a binding price floor?
a. They are increasingly willing to substitute away from producing the good, and the supply curve becomes less elastic.
b. There are no changes, and their elasticity of supply remains unchanged.
c. They are increasingly willing to substitute away from producing the good, and the supply curve becomes more elastic.
d. They are less willing to substitute away from producing the good, and the supply curve becomes less elastic.
e. They are less willing to substitute away from the good, and the supply curve becomes more elastic.
14. A tax on apples would cause consumers to suffer because:
a. consumer surplus would increase.
b. the price of apples would increase and fewer apples would be purchased.
c. revenues for apple growers would decrease.
d. the government would collect revenue from the tax.
e. producer surplus would decrease.
15. In most cases, taxes reduce economic efficiency because:
a. they lower prices for consumers and cause firms to suffer.
b. they increase firms’ profits at the expense of consumers.
c. taxes are perceived as unfair by some taxpayers.
d. the government often spends tax revenues on programs that some voters don’t like.
e. they reduce consumer surplus and producer surplus.
16. A tax on apples would cause the price paid by consumers to ___________ and the price received by producers to _____________.
a. increase; increase
b. increase; decrease
c. decrease; increase, then decrease
d. decrease; decrease
e. increase, then decrease; increase
17. Taxes almost always cause producer prices to decrease. How much they decrease depends on:
a. the elasticities of supply and demand.
b. the amount of the tax.
c. who is legally obligated to pay the tax.
d. who pays the tax out of pocket.
e. how often the government collects the tax.
18. In the long run, both supply and demand tend to become more elastic. This suggests that, in the long run, the:
a. deadweight loss from a tax will be less than it is in the short run.
b. deadweight loss will be zero.
c. government will likely reduce tax rates.
d. tax revenue will be lower than it is in the short run.
e. tax revenue will be higher than it is in the short run.
19. The costs of a market activity paid for by an individual NOT engaged in the market activity are:
a. external costs.
b. internal costs.
c. free-rider costs.
d. social costs.
e. common costs.
20. Refer to the accompanying figure. Which area represents the deadweight loss associated with producing at the market equilibrium instead of the social optimum?
a. A
b. B
c. A + B
d. C
e. A + B + C
21. What is the long-run consequence of a price ceiling law?
a. A surplus will continue to exist and will grow larger over time.
b. A surplus will continue to exist and will grow smaller over time.
c. A shortage will continue to exist and will grow larger over time.
d. A shortage will continue to exist and will grow smaller over time.
e. The amount of the surplus will not change.
22. Bob is willing to pay $65 for a new pair of shoes. Bill is willing to pay $50 for the same shoes. The shoes have a price of $45. What is the total consumer surplus for Bob and Bill?
a. $15
b. $20
c. $5
d. $25
e. $35
23. Muddy’s Bakery and Lilly’s Sweetshop both sell cupcakes. The market price of one chocolate cupcake is $2.50. Muddy’s is willing to sell a cupcake for as little as $1.65; Lilly’s is willing to sell a cupcake for as little as $1.75. What is the total producer surplus for the two firms?
a. $0.75
b. $1.60
c. $0.85
d. $2.50
e. $3.40
24. When looking at a supply and demand graph, you would find consumer surplus:
a. above the demand curve and below the supply curve.
b. below the demand curve and above market price.
c. to the right of equilibrium quantity and above market price.
d. above the demand curve and above the supply curve.
e. below market price and above the supply curve.
25. Explain what happens to the amount of consumer surplus and producer surplus when the supply of scarves suddenly declines (shifts left).
a. Producer surplus declines and consumer surplus is unchanged.
b. Consumer surplus declines and producer surplus is unchanged.
c. Consumer surplus declines and producer surplus declines.
d. Consumer surplus is unchanged and producer surplus is unchanged.
e. Producer surplus increases and consumer surplus increases.
26. Assume that a family spends 35% of its income on housing, 20% on travel-related expenses, 10% on utilities, 25% on health care, and 5% on miscellaneous items. Demand for which category will be most responsive to a change in price?
a. miscellaneous
b. health care
c. utilities
d. travel-related expenses
e. housing
27. When the price increases by 30% and the quantity demanded drops by 30%, the price elasticity of demand is:
a. perfectly inelastic.
b. inelastic.
c. unitary elastic.
d. elastic.
e. perfectly elastic.
28. Henry raised his quantity demanded of hockey pucks from 100 to 150 when the price fell from $5 to $3 per puck. Using the midpoint method, his price elasticity of demand is:
a. 0.80
b. 1.25
c. 1.00
d. 0.40
e. 0.80
29. At a price of $2, the quantity demanded for pens is 12. When the price increases to $3, the quantity demanded for pens is 10. The price elasticity of demand for pens is:
a. perfectly inelastic.
b. inelastic.
c. horizontal.
d. elastic.
e. perfectly elastic.
30. When would oil producers see the largest percentage decline in the quantity demanded for oil due to an increase in the price of oil today?
a. tomorrow
b. in 6 months
c. in 2 years
d. in 8 years
e. in 15 years
31. In the accompanying graph, the price elastic portion of demand is found in the ___________ region and the price inelastic portion of demand is found in the ___________ region of the graph.
a. middle; lower
b. lower; upper
c. upper; lower
d. middle; middle
e. None of these choices are correct.
32. If the percentage change in the quantity consumed of pizza is 8% and the percentage change in income is 2%, what is the income elasticity of demand for pizza?
a. 0.25
b. 4
c. 0.25
d. 4
e. 1
33. As price elasticity of supply becomes more elastic over time, the overall shape of the supply curve:
a. becomes more vertical.
b. remains unchanged.
c. becomes closer to 45 degrees from the origin.
d. becomes completely vertical.
e. becomes more horizontal.
Use the following information to answer the next two questions.
Market for a new hardcover book:
Demand: Qd = 325 – 8 P
Supply: Qs = –60 + 3 P
34. What would be the quantity demanded if a price ceiling is set at $20?
a. 90
b. 45
c. 265
d. 165
e. 305
35. What would be the quantity demanded if a price ceiling is set at $50?
a. 90
b. 45
c. 265
d. 165
e. 75
36. Producer surplus is the difference between:
a. supply and demand.
b. the price the producer receives and the willingness to sell a good.
c. the willingness to pay for a good and the willingness to sell a good.
d. the willingness to pay for a good and the amount that is paid to get it.
e. the price paid for a good and the amount of the good produced.
37. Consider the market for socks. The current price of a pair of plain white socks is $5.00. Two consumers, Jeff and Samir, are willing to pay $7.25 and $8.00, respectively, for a pair of plain white socks. Two sock manufacturers are willing to sell plain white socks for as little as $4.00 and $4.15 per pair. What is the total producer surplus in this market?
a. $0.15
b. $8.15
c. $0.85
d. $1.00
e. $1.85
38. Consider the market for socks. The current price of a pair of plain white socks is $5.00. Two consumers, Jeff and Samir, are willing to pay $7.25 and $8.00, respectively, for a pair of plain white socks. Two sock manufacturers are willing to sell plain white socks for as little as $4.00 and $4.15 per pair. What is the total producer AND consumer surplus (i.e., social welfare) in this market?
a. $7.10
b. $5.25
c. $1.85
d. $23.40
e. $4.50
39. A market has reached an efficient outcome when:
a. producers are able to produce and sell as much as they like.
b. total surplus is minimized.
c. producer surplus is greater than consumer surplus.
d. consumers are able to purchase as much as they like.
e. total surplus is maximized.
40. Which of the following statements is concerned with equity rather than efficiency?
a. Almost all taxes create some amount of deadweight loss.
b. Excise taxes tend to raise prices for consumers and reduce sales for firms.
c. Tax rates on the wealthy are too low and should be raised.
d. The incidence of a tax does not depend on who actually pays it.
e. Taxes generate revenues that governments spend on services.
41. When a tax is imposed on some good, what tends to happen to consumer prices and producer prices?
a. Consumer prices decrease and producer prices increase.
b. Consumer prices increase and producer prices decrease.
c. Consumer prices increase and producer prices increase.
d. Consumer prices decrease and producer prices increase.
e. Consumer prices and producer prices converge at the same point.
42. When a tax is imposed, consumer surplus and producer surplus are reallocated to:
a. social welfare.
b. tax revenue and deadweight loss.
c. tax revenue.
d. deadweight loss.
e. government spending on public services.
43. The costs or benefits of a market activity that affect a third party are called:
a. externalities.
b. public goods.
c. club goods.
d. internal costs.
e. common-resource goods.
44. For a market to work efficiently,
a. the external costs must be paid.
b. all external costs must be eliminated.
c. all internal costs must be eliminated.
d. the social costs must be equal to the internal costs.
e. all pollution must be eliminated.
45. Consider a market where production of the good is creating a negative externality. In the market equilibrium, there is a deadweight loss because the:
a. internal cost is not equal to the external cost.
b. internal cost is not equal to the internal benefit.
c. internal benefit is not equal to the external benefit.
d. social cost is greater than the internal benefit.
e. internal benefit is less than the internal cost.
46.When pollution (a negative externality) is created by firms, which of the following is NOT a valid way for the government to restore the social optimum?
a. require firms to install pollution-abatement equipment
b. require firms to change production techniques to reduce emissions
c. levy a tax on the production of the good
d. require firms to pay for the environmental damage they create
e. offer a subsidy to firms to reduce their production cost
47. If your friend says, “I am never going to buy another Avicii remix again!” his price elasticity of demand for Avicii remixes is:
a. perfectly elastic.
b. perfectly inelastic.
c. elastic.
d. inelastic.
e. unitary elastic.
48. If the income elasticity of demand is 0.5, the good will be a(n):
a. complement good.
b. substitute good.
c. necessity good.
d. inferior good.
e. luxury good.
49. When her income falls from $50,000 to $20,000, Alex increases her monthly purchase of hamburger from 20 pounds to 35 pounds. From the midpoint method, Alex’s income elasticity of demand for hamburgers is:
a. 1.57.
b. 0.63.
c. 0.54.
d. 0.85.
e. 1.57.
50. Zumba classes sell all 20 participant spots at a price of $4.50 each. When the instructor raised the prices to $5.50, 10 people attended the class. From the midpoint method, the price elasticity of demand for Zumba is:
a. 0.50.
b. 3.33.
c. 2.50.
d. 0.20.
e. 0.20.
1.
As you move left along the demand curve, the price elasticity of demand:
a. does not change.
b. moves closer to zero.
c. becomes more elastic.
d. becomes infinite.
e. becomes more inelastic.
2.
At a price of $2, the quantity demanded for pens is 12. When the price increases to $3, the quantity demanded for pens is 10. The price elasticity of demand for pens is:
a. perfectly inelastic.
b. elastic.
c. perfectly elastic.
d. inelastic.
e. horizontal.
3.
At higher prices, the price elasticity of demand is likely to be __________, whereas it is likely to be __________ at lower prices.
a. unitary elastic; elastic
b. perfectly elastic; perfectly inelastic
c. inelastic; elastic
d. elastic; inelastic
e. perfectly inelastic; perfectly elastic
4.
The city of Barlow is known for its wide variety of ice cream shops. What will happen if Nick's Ice Cream Palace raises the price of its shakes?
a. Demand will not change.
b. Demand will decrease by a greater proportion than the price.
c. The quantity demanded will increase by a greater proportion than the price.
d. Demand will increase by a greater proportion than the price.
e. The quantity demanded will decrease by a greater proportion than the price.
5.
Cross-price elasticity measures the relationship between:
a. two goods and services.
b. complements and inferior goods.
c. income and substitute goods.
d. normal goods and inferior goods.
e. necessities and luxuries.
6.
Demand is almost always more price elastic in the long run because:
a. government regulations increase.
b. people's preferences change.
c. newer versions of a good/service replace older ones.
d. more options become available and people can make different choices.
e. production of the good/service stops.
7.
For which of the following products should sellers raise the price in order to increase total revenue from college students?
a. spaghetti sauce
b. blue hooded sweatshirts
c. Gatorade
d. textbooks
e. concert tickets
8.
From the accompanying table, we would expect that, for recreational skaters, the price elasticity of demand for ice skates between $10 and $20 to be ________ than that of hockey players because ________.
a. more elastic; recreational skaters can substitute other activities
b. more elastic; ice skates are a normal good
c. the same; they both skate
d. less elastic; ice skates are an inferior good
e. less elastic; hockey players need skates
9.
If the income elasticity of demand is 1.2, the good will be a(n):
a. substitute good.
b. necessity good.
c. luxury good.
d. inferior good.
e. complement good
10.
The income elasticity of demand for a good measures the responsiveness of ________ to a change in ________.
a. quantity demanded; price of a related good
b. demand; price of good
c. quantity demanded; price of a good
d. quantity demanded; income
e. income; quantity demanded
11.
Income elasticity of demand for professional haircuts is found to be 1.7. This service is a:
a. substitute good.
b. luxury good but not a normal good.
c. necessity good but not a normal good.
d. normal good and a luxury good.
e. normal good and necessity good.
12.
The introduction of new gaming systems that can compete effectively with the Nintendo console will make the demand for the Nintendo console become:
a. more price inelastic.
b. perfectly price inelastic.
c. perfectly price elastic.
d. more price elastic.
e. unchanged.
13.
Jill has a fixed budget and buys all of the items listed below. When will a 20% reduction in price cause her to change the amount she buys the most?
a. scented candles, regular price is $25
b. flat-screen LCD TV, regular price is $400
c. GAP jeans, regular price is $75
d. jasmine rice, regular price is $4/lb
e. living room couch, regular price is $300
14.
A local merchant raises the price of his good and finds that his total revenues increase. The demand for this good is:
a. perfectly elastic.
b. unitary elastic.
c. elastic.
d. relatively price sensitive.
e. inelastic.
15.
The local National Hockey League (NHL) team decides to lower its ticket prices in order to attract more fans. They are hoping that the:
a. quantity increase matters more than the price decrease to total revenue.
b. price elasticity of demand is unitary elastic.
c. price decrease matters more than the quantity increase to total revenue.
d. price elasticity of demand is perfectly inelastic.
e. price elasticity of demand is perfectly elastic.
16.
"No matter the price, I will always buy five gallons of ice cream a week. I love ice cream!" This statement reflects a price elasticity of demand that is:
a. inelastic.
b. elastic.
c. perfectly elastic.
d. perfectly inelastic.
e. unitary.
17.
Pepsi vendors who raise their price at professional sporting events increase total revenue because the price elasticity of demand is ________. When they raise their prices at gas stations, they decrease total revenue because the price elasticity of demand is ________.
a. elastic; unitary elastic
b. elastic; elastic
c. elastic; inelastic
d. unitary elastic; elastic
e. inelastic; elastic
18.
Refer to the information in the accompanying table. Without any calculations, you know that sushi is a(n):
mc009-1.jpg
a. inferior good.
b. normal good.
c. complement to sake.
d. necessity.
e. substitute for fish sticks.
19.
The Sunny Softball league found that, when it changed its ticket prices from $10 to $5, there was a more than proportional but not infinite increase in attendance. The price elasticity of demand is:
a. elastic.
b. perfectly inelastic.
c. inelastic.
d. perfectly elastic.
e. unitary elastic.
20.
Super Economy Brand products have an income elasticity of -1.4. Thus, these are __________ goods.
a. complementary
b. inferior
c. normal
d. luxury
e. necessity
21.
There was a more than proportional decrease in quantity demanded for cupcakes when the local baker raised the price by 20%. The price elasticity of demand for cupcakes is:
a. elastic.
b. perfectly elastic.
c. perfectly inelastic.
d. unitary elastic.
e. inelastic.
22.
To keep the percentage change in quantity demanded equally proportional to the percentage change in price when the prices rise by 5%, a consumer would need to ________ quantity demanded by ________.
a. increase; 10%
b. increase; 5%
c. decrease; 10%
d. decrease; 5%
e. increase; 2%
23.
Used car dealers find that their sales rise in a recession. We can be certain that consumers view used cars as:
a. luxuries.
b. normal goods.
c. substitutes.
d. necessities.
e. inferior.
24.
Use the following scenario to answer the questions that follow:
Dairy Dream, a local ice cream store, finds that it sells out of ice cream sandwiches at the current price of $1. It raises the price to increase its revenues and finds that no one buys ice cream sandwiches anymore.
The demand for ice cream sandwiches is:
a. perfectly inelastic.
b. unitary elastic.
c. inelastic.
d. elastic.
e. perfectly elastic.
25.
When Heavenly Cookies prices its sugar cookies at $1.00, they sell 75 cookies. They lowered the price to $0.50 and sold 200 cookies. Their total revenue ________ because the price elasticity of demand for sugar cookies is ________.
a. fell; inelastic
b. stayed the same; unitary elastic
c. rose; elastic
d. fell; elastic
e. rose; inelastic
26.
When Nina decreases her price of lipstick from $7 to $5, she finds that her sales increase from 6 to 7. She faces ________ demand for her product, and this price change will ________ her total revenue.
a. perfectly inelastic; lower
b. elastic; raise
c. unitary elastic; not change
d. perfectly elastic; raise
e. inelastic; lower
27.
When the price elasticity of demand is elastic, a consumer is:
a. relatively responsive to a change in price.
b. relatively unresponsive to a change in price.
c. completely responsive to a change in price.
d. unaffected by a change in price.
e. completely unresponsive to a change in price.
28.
When the price of scooters drops by 5%, the quantity demanded changes by 20%. You know that the price elasticity of demand for scooters is:
a. elastic.
b. perfectly elastic.
c. unitary elastic.
d. inelastic.
e. perfectly inelastic.
29.
When you change your quantity demanded of one good because of a change in price of another good, you are acting according to the principle of:
a. income elasticity of supply.
b. price elasticity of demand.
c. cross-price elasticity of demand.
d. price elasticity of supply.
e. income elasticity of demand.
30.
Which one of the following pairs of goods is likely to have a negative cross-price elasticity of demand?
a. sofas and dining room tables
b. trucks and sedans
c. manicures and pedicures
d. shoes and socks
e. purses and backpacks
31.
Which one of the following pairs of goods is likely to have a positive cross-price elasticity of demand?
a. potatoes and sausage
b. milk and coffee
c. butter and toast
d. fruit and bacon
e. pancakes and waffles
1.
Assume that the price of rubber increased at the same time that Michael Jordan, arguably the best NBA basketball player of all time, became famous. What do you expect to happen to the equilibrium price and equilibrium quantity of the basketball shoes that are promoted by Michael Jordan?
a. equilibrium price will go up and equilibrium quantity will go down.
b. equilibrium price will go up and equilibrium quantity will go up.
c. equilibrium price will go down and equilibrium quantity will be indeterminate.
d. equilibrium price will go down and equilibrium quantity will go up.
e. equilibrium price will go up and equilibrium quantity will be indeterminate.
2.
As you move right along a demand curve, the price elasticity of demand:
a. becomes more inelastic.
b. becomes more elastic.
c. does not change.
d. becomes infinite.
e. moves closer to zero.
3.
By reducing trade barriers, the government:
a. reduces imports.
b. increases the price of the imported good.
c. reduces exports.
d. decreases efficiency.
e. decreases deadweight loss of monopoly
4.
Consider the market for socks. The current price of a pair of plain white socks if $5.00. Two consumers, Jeff and Samir, are willing to pay $7.25 and $8.00, respectively, for a pair of plain white socks. Two sock manufacturers are willing to sell plain white socks for as little as $4.00 and $4.15 per pair. What are the total gains from trade in this market?
a. $7.10
b. $5.25
c. $1.85
d. $23.40
e. $4.50
6.
Demand: Qd = 2,600-5p
Supply: Qs = 1,000+10p
a. 600
b. 2,067
c. 0
d. 3,000
e. 2,400
7.
Demand: Qd = 325 - 8 P
Supply: Qs = -60 + 3 P
What would be the equilibrium price for hardcover books?
a. $100
b. $45
c. $385
d. $35
e. $11
8.
Demand: Qd = 325 - 8 P
Supply: Qs = -60 + 3 P
What would be the equilibrium quantity for hardcover books?
a. 100
b. 45
c. 385
d. 35
e. 11
9.
The difference between the price a consumer is willing to pay and the equilibrium price is:
a. producer profit.
b. consumer surplus.
c. consumer waste.
d. tax revenue.
e. producer benefit.
10.
Do all buyers benefit from a binding price ceiling?
a. yes. a binding price ceiling benefits all buyers because it allows them to obtain the good in the legal market.
b. no. a binding price ceiling benefits only some buyers because not all are able to obtain the good in the legal market.
c. no. a binding price ceiling benefits no buyers because sellers are unwilling to sell and of their products.
d. no. a binding price ceiling benefits only some buyers because, although the price is initially lower, it eventually increases to the equilibrium price.
e. no. a binding price ceiling benefits no buyers because they are unwilling to buy any of the products at a price higher than the equilibrium.
11.
The economists at ET Consulting consider Campbell's Soup to be an inferior good. During a recession, when the income in the economy is decreasing, economists at ET Consulting would expect the demand curve for Campbell's Soup to ______, causing the equilibrium price to _______ and the equilibrium quantity to _______.
a. shift to the left; decrease; decrease.
b. shift to the left; increase; increase.
c. shift to the right; decrease; increase.
d. shift to the right; increase; decrease.
e. shift to the right; increase; increase.
12.
Economists consider both explicit and implicit costs when measuring economic profit. The reason they consider explicit costs is that:
a. they are more conservative than accountants, who consider only accounting costs.
b. most businesses forget to pay their implicit costs.
c. a business must cover its opportunity costs as well as its out-of-pocket expenses to be truly profitable
d. implicit costs are typically far larger than explicit costs.
e. implicit costs include expenses like taxes and fees to the government.
13.
Externalities exist because:
a. owners of private property have an incentive to maintain their property.
b. owners of private property have little incentive to protect their property.
c. owners of private property are not able to trade with others.
d. property rights are not clearly defined.
e. there is too much private ownership of property.
15.
A firm's short-run supply curve is equal to the firm's:
a. marginal revenue curve.
b. demand curve.
c. marginal cost curve above minimum average total cost (ATC)
d. marginal cost curve below minimum average variable cost (AVC)
e. marginal cost curve above minimum average variable cost (AVC)
16.
Higher input costs:
a. reduce profits.
b. increase profits.
c. shift the demand curve.
d. always happen during a recession.
e. provide an incentive to hire more workers.
17.
Holding all else constant, a decrease in the market demand for a product in a competitive market would cause:
a. the average total cost (ATC) curve of the firms to decrease.
b. an increase in the price a firm could charge for the product.
c. the marginal cost (MC) curve of the firms to decrease.
d. the marginal revenue (MR) curve of the firms to shift downward.
e. an increase in profits for the firm
19.
If a store sells a good at the market price, even though the government authorities have set the maximum price that can be charged for it, the store is selling the good in a(n):
a. black market for a market price that is higher.
b. black market for a market price that is lower.
c. effort to eliminate a surplus of the good.
d. legal market for a market price that is higher.
e. legal market for a market price that is lower.
20.
If Jim can sell paper at a lower opportunity cost than Dwight can, then:
a. Jim has an absolute advantage in paper sales.
b. Dwight has an absolute advantage in paper sales.
c. Jim has a positive advantage in paper sales.
d. Jim has a comparative advantage in paper sales.
e. Dwight has a comparative advantage in paper sales.
21.
If the average cost of producing 9 sweaters is $6.50 and the marginal cost of producing the 10th sweater is $6.25, the average cost of producing 10 sweaters will be:
a. $6.50
b. more than $6.50
c. less than $6.50
d. exactly $6.50
23.
If the cross-price elasticity of demand is 6, Good A and Good B are:
a. inferior goods.
b. complements.
c. substitutes.
d. normal goods.
e. luxury goods.
24.
If the government imposes a tax on each aluminum can sold, statutorily payable by consumers when they purchase the item, then, in the market for goods sold in aluminum cans, the
a. supply curve shifts to the left.
b. supply curve shifts to the right.
c. demand curve shifts to the left.
d. demand curve shifts to the right.
e. supply curve and the demand curve shift to the left.
25.
If the income elasticity of demand is 0.5, the good will be a(n):
a. complement good.
b. substitute good.
c. necessity good.
d. inferior good.
e. luxury good.
26.
If the price of rubber used to make tires were to increase by 20% over the fiscal year and if all else were held constant, what would you expect to happen to the supply curve of tires that are sold separately from automobiles?
a. The supply curve would shift to the right.
b. The quantity supplied would increase.
c. The supply curve would shift to the left.
d. The supply curve would shift down.
e. Nothing; the cost of rubber has no impact on the supply of tires.
27.
In agriculture, a "bumper crop" refers to a particularly productive harvest. If there is a bumper crop for wheat at the same time that more people become allergic to wheat and all else is held constant, what will happen to the equilibrium price and quantity for wheat?
a. The equilibrium price will go up and equilibrium quantity will go up.
b. The equilibrium price will be indeterminate and equilibrium quantity will go up.
c. The equilibrium price will go down and equilibrium quantity will be indeterminate.
d. The equilibrium price will go up and equilibrium quantity will be indeterminate.
e. The equilibrium price will be indeterminate and equilibrium quantity will go down.
28.
Income elasticity of demand for professional haircuts is found to be 1.7. This service is a:
a. normal good and necessity good.
b. luxury good but not a normal good.
c. necessity good but not a normal good.
d. substitute good.
e. normal good and a luxury good.
29.
In some countries, a price ceiling that is binding is placed on prescription medicines. What would you expect the prescription medicine market to be like in these countries?
a. The legal max price would mean that all consumers are able to receive the medicines they need at a price they can afford.
b. The legal max price would mean that pharmaceutical companies face an incentive to sell more prescription medicines in that country.
c. The legal max price would mean that it is unlikely that an illegal and dangerous black market for prescription drugs will form in that country.
d. The legal max price would mean that pharmaceutical companies face an incentive to develop new prescription medicines.
e. The legal max price would mean that not all consumers will have access to prescription medicines.
30.
In the case of a negative externality, taking into social costs
a. too little of the good is produced
b. the right amount of the good is produced
c. too much of the good is produced
d. taxes should be cut
31.
Jim and Lisa own a dog-grooming business in Champlain, New York, called JL groomers. There are many buyers and many sellers in the dog-grooming service market. JL Groomers experiences normal cost curves, with the marginal cost (MC) curve crossing average variable cost (AVC) at $14 and average total cost (ATC) at $22. JL Groomers wil make zero economic profits if the market price:
a. $14.
b. between $14 and $22.
c. below $14.
d. $22.
e. above $14.
32.
Joan is deciding where to spend her spring break if she goes to Cancun, Mexico, the trip will give her 9,000 units of utility and will cost her $300. if she travels to Florida instead, the trip will give 8,000 units of utility and will cost her only $200. Joan will do best going to:
a. Mexico because her total pleasure will be greater.
b. Florida because her total cost will be lower.
c. Mexico because her pleasure per dollar will be greater.
d. Florida because her pleasure per dollar will be greater.
36.
The maximum long-run economic profit earned by a competitive firm is:
a. 0.
b. $600 per day.
c. $1,200 per day.
d. $1,800 per day.
e. $20 per hour.
37.
Nita is a devoted Coca-Cola consumer, whereas Becky can drink either Coca-Cola or Pepsi products. Nita's demand for Coca-Cola will be relatively more ________, while Becky's demand will be relatively more ________.
a. elastic; inelastic
b. unrelated to price; elastic
c. perfectly elastic; elastic
d. inelastic; elastic
e. unitary elastic; inelastic
38.
The old saying "getting the biggest bang for your buck" means that:
a. consumers never experience diminishing marginal utility.
b. consumers maximize their utility.
c. consumers spend every dollar in their budget.
d. the real-income effect is equal to the substitution effect.
e. consumers stop consuming when the marginal utilities of each good are equal regardless of the prices of each good.
39.
One argument against patent and copyright laws is that they:
a. provide incentives to invest in research and development.
b. protect intellectual property.
c. hinder creativity.
d. increase creativity.
e. limit exposure that can benefit companies and individuals.
40.
Producer surplus is defined as the:
a. difference between the willingness to pay for a good and the willingness to sell it.
b. difference between the price the seller receives and the willingness to sell it.
c. difference between the willingness to pay for a good and the price paid to get it.
d. quantity of units that consumers want to buy at the market price.
e. total revenue earned from producing and selling some good.
41.
A sporting goods store observes that as they reduce the price of squash balls from $5 to $4, their quantity demanded rises from 200 to 220. Rounding to the nearest tenth, they correctly compute the elasticity of demand of squash balls to be:
a. 0.1
b. 0.4
c. 0.5
d. 0.6
e. 2.3
43.
Suppose Jim is a brilliant attorney who can draft especially persuasive legal briefs. He also happens to possess some excellent administrative skills such as typing, filing, assembling binders and notes, and making reservations. Which best describes whether Jim should hire an administrative assistant to help him?
a. Jim should not hire an administrative assistant because he has an absolute advantage in performing administrative functions.
b. Jim should not hire an administrative assistant because he likely has a comparative advantage in performing administrative functions.
c. Jim should hire an administrative assistant because the assistant would likely have an absolute advantage in writing legal briefs.
d. Jim should hire an administrative assistant because the assistant would likely have a comparative advantage in performing administrative functions.
e. Jim should hire an administrative assistant because the assistant would likely have a comparative advantage in writing legal briefs.
44.
Taxes almost always cause producer prices to decrease. How much they decrease depends on:
a. the elasticities of supply and demand.
b. the amount of the tax.
c. who is legally obligated to pay the tax.
d. who pays the tax out of pocket.
e. how often the government collects the tax.
45.
The University of California at Irvine (UCI) allows student organizations and private firms to sell items on campus to raise funds for various activities. Many of the organizations sell boba, a Taiwanese tea drink, because boba is popular with students. The market for boba on the UCI campus is very competitive. If legislation is passed to restrict the entry of private firms into the boba market at the UCI campus, the legislation is passed to restrict the entry of private firms into the boba market at the UCI campus, the
a. market would become less competitive.
b. market would become more competitive.
c. demand for boba would fall.
d. supply for boba would increase.
e. demand for boba would increase.
46.
What would happen in the market for SUVs if the government started to subsidize the production of SUVs that get very few miles per gallon and the price of gasoline went up?
a. The equilibrium price will go up and equilibrium quantity will go up.
b. The equilibrium price will go down and equilibrium quantity will be indeterminate.
c. The equilibrium price will be indeterminate and equilibrium quantity will go up.
d. The equilibrium price will go up and equilibrium quantity will be indeterminate.
e. The equilibrium price will be indeterminate and equilibrium quantity will go down.
47.
When a tax is imposed on some good, what usually happens to consumer and producer surplus?
a. They both increase.
b. They both fall to zero.
c. They both decrease.
d. Consumer surplus increases and producer surplus decreases.
e. Consumer surplus decreases and producer surplus increases.
48.
When both curves shift:
a. equilibrium price is always indeterminate.
b. equilibrium quantity is always indeterminate.
c. equilibrium price and equilibrium quantity are indeterminate.
d. equilibrium price OR equilibrium quantity is indeterminate, but we can't predict which one.
e. neither equilibrium price nor equilibrium quantity is indeterminate.
49.
When the price of basketballs is high, a ______ in price will raise total revenue. When the price is low, the seller should _______ the price to increase total revenue.
50.
When the price of ground beef increases and all else is held constant, we would expect the supply of hamburgers to _________, causing the price to _________.
a. decrease; increase
b. decease; decrease
c. stay the same; stay the same
d. increase; increase
e. increase; decrease
51.
When the price softballs is high, a _____ in price will raise total revenue. When the price is low, the seller should _____ the price to increase total revenue.
a. decrease; raise
b. rise; raise
c. decrease; decrease
d. rise; decrease
e. decrease; not change
52.
Where would we find a firm's minimum efficient scale of production?
a. at the lowest point on its long-run average total cost curve
b. at the highest point on its long-run average total cost curve
c. in the middle of its long-run average total cost curve
d. at the highest point on its long-run average fixed cost curve
e. in the middle of its long-run average variable cost curve
54.
Which of the following is the best example of a variable cost in the short run?
a. rent for an office
b. rent for a restaurant
c. wages for employees
d. debt payments for a loan
e. rent for factory space
55.
While there are many pizza places in Curtisville, Pappy's Pizza is known for its distinctive deep-dish pizza with an almost pie-like crust, whereas Momma's Pizza Pizzazz is comparable to many other restaurants. Pappy's is likely to find that it can ________ prices to increase total revenue, and Momma's must ________ prices to increase total revenue.
a. raise; lower
b. lower; raise
c. raise; raise
d. lower; lower
e. raise; not change
56.
Who benefits from voluntary trade?
a. buyers
b. sellers
c. the government
d. buyers and sellers
e. buyers and the government
57.
Your roommate is studying to be a drummer in a rock band. She practices in your apartment every evening for three hours and the noise makes it difficult for you to concentrate. This is an example of:
a. A negative externality
b. the tragedy of the commons.
c. an internal cost.
d. the free-rider problem.
e. a positive externality.
1.
The ability to download music and movies from the Internet without paying is:
2.
After a tax is imposed, the price paid by consumers _________ and the price received by producers _________.
3.
The air is a:
4.
At a price of $2, the quantity demanded for pens is 12. When the price increases to $3, the quantity demanded for pens is 10. The price elasticity of demand for pens is:
5.
At very low tax rates:
6.
The benefit to society from the imposition of a tax is the:
7.
A binding price ceiling will have the following consequences:
8.
The Coase theorem suggests that private parties:
9.
Compared to producers, consumers will lose the lesser amount of surplus from a tax if:
10.
Congestion charges cause the price of driving to __________. Therefore, the number of cars on the road will __________.
11.
Consider a market where production of a good generates a negative externality. In the market equilibrium,
12.
The cost to society created by distortions in the market as a result of a tax is also known as:
13.
Cross-price elasticity measures the relationship between:
14.
Demand: Qd = 154,000 - 86 P
Supply: Qs = -100 + 14 P
What would be the quantity demanded if a price ceiling is set at $2,000?
15.
The difference between the willingness to pay for a good and the amount that is paid to get it is also known as:
16.
Excise taxes are popular sources of revenue for governments because:
17.
Firms are indifferent to changing prices when the price elasticity of demand is:
18.
Firms supplying twisty-ties decrease the quantity supplied of inputs by 10% when the price decreases by 5%. The price elasticity of supply for twisty-ties is:
19.
Global warming is an example of:
20.
Goods that are necessities are very likely to have:
21.
A good that is rival and nonexcludable is defined as a:
22.
Holding all else constant, when the price of a good decreases:
23.
How would an economist explain a teenager's continued unemployment where there exists a minimum wage?
24.
If a minimum wage is set at $5.50, predict the amount of disequilibrium in the labor market.
25.
If a price ceiling is imposed at $15 per unit when the equilibrium market price is $12, there will be:
26.
If a price floor is imposed at $15 per unit when the equilibrium market price is $12, there will be
27.
If a tax is imposed on a good with a perfectly elastic demand, the burden of the tax will be borne:
28.
If a tax is imposed on a good with a perfectly inelastic supply, the burden of the tax will be borne:
29.
If government regulation forces firms in an industry to internalize the externality, then we can expect the equilibrium price of the good to __________ and the equilibrium quantity to __________.
30.
If the cross-price elasticity between Good A and Good B is -1.5 and the percentage change in quantity demanded of Good B is 15%, what is the percentage change in the price of Good A?
31.
If the cross-price elasticity of demand between Good A and Good B is 3, the price of Good B increases, and the price elasticity of demand for Good B is inelastic, we can expect to see a ________ change in the quantity demanded for Good A:
32.
If the cross-price elasticity of demand is 6, Good A and Good B are:
33.
If the government decides to adopt a carbon tax, the price of goods whose production generates carbon emissions will __________ and the quantity produced will __________.
34.
If the income elasticity of demand for laptops is 3.5, you know that laptops are a(n):
35.
The incidence of a tax reflects:
36.
Income elasticity of demand for professional haircuts is found to be 1.7. This service is a:
37.
A local merchant raises the price of his good and finds that his total revenues increase. The demand for this good is:
38.
Many states have laws that limit the maximum amount of interest that a lender can charge a
borrower. Such a law is an example of a(n):
39.
Market for a new hardcover book:
Demand: Qd = 325 - 8 P
Supply: Qs = -60 + 3 P
What would be the equilibrium quantity for hardcover books?
40.
Market for a new hardcover book:
Demand: Qd = 325 - 8 P
Supply: Qs = -60 + 3 P
What would be the quantity supplied if a price floor is set at $50?
41.
Market for used cars:
Demand: Qd = 154,000 - 86 P
Supply: Qs = -100 + 14 P
What would be the equilibrium price for used cars?
42.
The music you buy on the Internet is:
43.
One strategy I might use to be elected mayor of a university town is to place a binding price cei
44.
the pollution emitted by your car is an example of a(n):
45.
Price elasticity of demand is measured as the:
46.
A producer knows that the price elasticity for his product is -0.5. He wants to increase quantity demanded by 30%. By what percentage does he need to change the price?
47.
Producer surplus is the difference between:
48.
Robert's Furniture produces high-quality wooden bedroom sets that take approximately 4 months to make, from start to finish. The price elasticity of supply for these bedroom sets in the short term is:
49.
Super Economy Brand products have an income elasticity of -1.4. Thus, these are __________ goods.
50.
A tax on milk would likely cause a decrease in the price of:
51.
The town of Fairness has a law that says that wages should be high enough to ensure that all people can afford to buy enough food to feed their families. The law that sets food prices low enough to meet these requirements would be an example of a:
52.
Visiting the public beach during summer is an example of an activity that is:
53.
What is a black market?
54.
What will I do differently as a buyer in the black market in the long run?
55.
What would you expect the consequences to size and quality would be for a product sold under a binding price ceiling?
56.
When a negative externality is not internalized, then the equilibrium price of the good produced is too __________ and the equilibrium quantity produced is too __________.
57.
When Clayton starts working at his first full-time job out of college with a $60,000 salary, he is likely to buy more ________ and less ________.
58.
When the price of a basketball is $15, the quantity supplied is 5,000. When the price increases to $20, the quantity supplied is 10,000. The price elasticity of supply is:
59.
When the price of a good increases and all else is held constant:
60.
When you change your quantity demanded of one good because of a change in price of another good, you are acting according to the principle of:
61.
Which good has well-defined property rights?
62.
Which of the following is a cost of internalizing a negative externality?
63.
Which of the following is the best example of a common-resource good?
64.
Which of the following statements is concerned with efficiency rather than equity?
65.
Which of the following statements is concerned with equity rather than efficiency?
66.
Which one of the following pairs of goods is likely to have a negative cross-price elasticity of demand?
67.
You are a senator from Kansas who wants to help farmers. You have worked to encourage the passage of a law that would impose a binding price floor on wheat. What would you expect your critics to say?
68.
You share a house with two other people. You are a concert pianist and often practice at home. One roommate enjoys listening to you practice, but the other does not. For the roommate who enjoys listening to you play, this is an example of __________; for the other roommate, it is an example of __________.
69.
You would expect there to be many customers for a black market good when the opportunity cost of finding the good under a:
4.
According to the Coase theorem, negative externalities can be internalized if:
6.
All of the following are characteristics of perfect competition except?
7.
As price elasticity of supply becomes more elastic over time, the overall shape fo the supple curve:
8.
At $2, Demand: 50. Supplies: 20. If the price of this good is $2, there would be a ______ of _______ unites.
9.
At $6 firm one: 6N, firm two: 4N. Assuming there are only two firms in the market. If the price of nachos is $6 dollars, the market will supply?
10.
A binding price ceiling will have the following consequences:
11.
Bob is willing to pay %65 for a new pair of shoes. Bill is willing to pay to $50 for the same shoes. The shoes have a price of 45. What is the total consumer surplus for Bob and Bill?
12.
Chris runs a sporting food store, and knows that the price elasticity of demand for this sport clothing line is -1.5. He is planning to lower the price by 10%. The percentage change in quantity demanded will be:
13.
Common- resource goods are:
14.
Competitive market equilibrium is:
15.
Consider two labor markets. In the first, the elasticity of supply is relatively elastic, while it is relatively inelastic in the latter. Imposing a minimum wage in each market would result in ______ unemployment in the first market and ________ unemployment in the second market.
16.
Consumer surplus is defined as the:
17.
______ corresponds to the profit-maximizing quantity that a competitive firm would produce.
18.
The cost or benefits of a market activity that affect a third party are called:
19.
Cost that have been incurred as a result of past decisions are known as ____ cost.
20.
Do all buyers benefit from a binding price ceiling?
21.
Economics is the study of:
22.
Economists believe that individuals compare the benefits and costs of various options when making a decision and in so doing act _______.
23.
The equilibrium price and quantity is in this market is $4 dollars because the demand is :40 and supply is :40.
24.
The equilibrium price of peanut butter is $5. A study comes out that says the fat in peanut better is good for your heath. Holding all other factors constant, which of the following scenarios could happen?
27.
An example of a binding price ceiling is:
28.
An explicit cost for a business that manufactures bicycles would be the:
29.
For a market to be competitive:
30.
Global warming is an example of?
31.
A good that is rival and excludable is defined as a ______ good.
32.
How would an economist explain a teenager's continued employment where there exists a minimum wage?
33.
If ACT=58 and Q= 100. How much is the value of the total cost?
34.
If a firm experiences economies of scale, is the long-run cost curve:
35.
If a price ceiling is imposed at $15 per unit when the equilibrium market price is $12, there will be:
36.
If firms in a competitive market are making positive economic profits, you would expect firms to______ the market, causing the ______ curve to shift to the ______.
37.
If minimum wage is established at $7.50, determine the amount of disequilibrium in the labor market.
38.
If the cross-price elasticity of demand is -5, Good A and Good B are:
39.
The important act of holding all other variables constant while examining a particular variable is known as:
40.
The incidence of a tax reflects:
41.
Income elasticity of demand for professional haircuts is found to be 1.7. This service is a:
42.
In some countries, a binding price ceiling is placed on prescription medicines. What would you expect the prescription medicine market to be like in these countries?
43.
In the short run, the cost of ____ is variable, whereas the cost of _____ is fixed.
44.
Is there an opportunity cost to increased investment in capital goods today?
45.
Kimiko owns a cupcake shop in Newport Beach, California. The market for cupcake is very competitive. At Kimiko's current production level, her marginal cost is $25 and her marginal revenue is $29. To maximize profit Kimiko should?
46.
The law that sets food prices low enough to meet these requirements would be an example of a:
47.
Lila shares a house with two other people. She us a concert pianist and often practices at home. One roommate enjoys listening to her practice, but the other does not. Roommate who enjoys it is an example of______; for the other it is________.
48.
Lisette is the owner of a bakery that earns zero economic profit. Last year her total revenue was $145,000, her rent was $12,000, her labor costs were $65,000, and her overhead expenses were $15,000. From this information, we know her totally explicit cost were:
49.
A major reason why public goods are NOT supplies by the market is the:
50.
A market has reaches an efficient outcome when:
51.
Michael: sculptures 10, painting 5. Angelo: Sculptures 6, Painting 2. Does either one have comparative advantage?
52.
The minimum wage law is an example of a:
53.
One way to promote a new business is to offer free items. If you were to open a new restaurant and offer free food, you likely would have a line out the door. How would an economist understand the behavior of those in line?
54.
The opportunity cost of working that than going to school is:
55.
Pepsi and Coke are considered substitute goods. Because of this one would predict that holding all else constant, fi the price of Pepsi increases we would see:
56.
Pepsi vendors who raise their price at professional sporting event increase total revenue because the price elasticity of demand is _______. When they raise their prices at gas stations, they decrease totally review because the price elasticity of demand is ______.
57.
A point outside the PPF (E) is?
58.
The pollution emitted by a car is an example of a _____ cost.
59.
The production function shows the relationship between the:
60.
The production possibilities frontier show:
61.
PROFIT= TR-TC= (_____)*Q.
62.
Shawna wins the lottery and her income increases by 60%. She used to buy 10 pints of cottage cheese per month and now she buys 12 pints. Her income elasticity of demand for cottage cheese is _______, making it a ________ good.
63.
Social welfare is measured as the sum of:
64.
Somethings is a normal good if the demand for the good:
65.
Specialization and trade allow individuals to:
66.
Suppose a perfectly competitive paper firm can produce six tons of paper at an output level where marginal revenue is equal to marginal cost. The price per ton is $100 and the average total cost is $75. What is the totally profit or lose that the paper firm is earning?
67.
TC= FC+__.
68.
What can be said about scarcity?
69.
What good is most likely to have a negative income elasticity of demand?
70.
What is a possible problem with using faulty assumptions when building an economic model?
71.
What is the amount of the tax, as measured along the y axis?
72.
What is the indirect incentive in the unemployment insurance program?
73.
What is the midpoint method?
74.
What is the opportunity cost of taking this exam?
75.
What is the total cost to society in terms of lost social welfare, created as a result of the tax?
76.
What would you expect the consequences to size and quality would be for a product sold under a binding price ceiling?
77.
When Nina decreases her price of lipstick form $7 to $5, she finds that her sales increase from 6 to 7. She faces ______ demand for her product, and this price change will ______ her total revenue.
78.
When the price is ________ the equilibrium price, we would expect there to be a ______, causing the market to put _________ pressure on the price until it went back to the equilibrium price.
79.
When you change your quantity demanded of one good because of a change in price of another good, you are acting according to the principle of:
80.
Where is the revenue collected from this tax?
81.
Where is the total amount of producer and consumer surplus, in this market after the tax is imposed?
82.
Which areas represent consumer surplus after the tax is imposed?
83.
Which characteristic of competitive markets is mainly responsible for firms making zero economic profit in the long run?
84.
Which is an example of an almost perfect competitive market?
85.
Which of the following changes in the coffee market would shift the supply curve to the right?
86.
Which of the following is a macroeconomic question?
87.
Which of the following is a microeconomic question?
88.
Which of the following is an example of a positive externality?
89.
Which of the following is a normative statement?
90.
Which of the following is a positive statement?
91.
Which of the following is bother a shirt in supply and a shift in demand?
92.
Which of the following is the best example of a common-resource good?
93.
Which of the following situations illustrates an incentive?
1.
A change in quantity supplied
2.
A good that is nonrival and nonexcludable is defined as a ________ good.
3.
a good that is nonrival and nonexcludable is defined as____ good
4.
A micro decision is when an individual decides not to buy a new car
5.
An example of an unintended consequence is when a tax cut leads to a spike in consumer spending.
6.
at higher prices, the elasticity of demand is likely to be____, whereas it is likely to be ____ at lower prices
7.
Because of scarcity we have no choice about which wants and needs to satisfy
8.
clean air becomes polluted because
9.
Consider a market where production of the good is creating a negative externality. In the market equilibrium, there is a deadweight loss because the
10.
Decisions are made at the margin and It is crucial to recognize that economics and accounting are separate evaluations made at the margin.
11.
do all buyers benefit from a binding price ceiling?
12.
During a job search, individuals will sometimes accept the lower of two competing salary offers because the lower salary is still better than the salary earned at the previous job.
13.
Excise taxes are popular sources of revenue for governments because
14.
Excise taxes are taxes that are
15.
externalities exist becasue
16.
how can a firm increase total revenue if demand is inelastic?
17.
if a price ceiling is imposed at $ 15 per unit when the equilibrium market price is $12, there will be
18.
if the income elasticity of demand is 1.2, the good will be a(n)____ good
19.
if the price elasticity of supply is 2.5, we know that it is
20.
In a market where supply and demand are both somewhat elastic, but demand is more elastic than supply, consumers will bear less of the burden of a tax because
21.
Income elasticity refers to
22.
In the long run, both supply and demand tend to become more elastic. This suggests that, in the long run, the
23.
producer surplus is the difference between
24.
sellers of bottled water find that whether the price falls or rises, the quantity bought by consumers remains unchanged every week. the price elasticity of demand for bottled water is...
25.
the cost of an activity paid for by the individual and the 3rd party is defined as a(n)
26.
The cost of a trade-off is known as the comparative cost of that decision
27.
the difference between the willingness to pay for a good and the amount that is paid to get it is also known as
28.
The economic entity most likely to engage in price gouging is
29.
The government can give people a negative direct incentive not to save but to spend money by providing individuals a subsidy to save their money
30.
The law of supply states that, all other things being equal,
31.
The maximum amount of tax revenue is generated when the good being taxed has a
32.
The measure of the responsiveness of the demand for one good to the percentage change in the price of the other good is
33.
the minimum wage law is an example of a
34.
the net cost to society from the imposition of a tax is also known as
35.
The pollution emitted by a car is an example of a(n) ________ cost.
36.
the sunny softball league found that when it changed its ticket prices from $10 to $5 , there was a more than proportional but not infinite increase in attendance. the price elasticity of demand...
37.
The town of Fairness has a law stating that wages should be high enough to ensure that all people can afford to buy enough food for their families. The law that sets wages would be an example of a
38.
The tragedy of the commons
39.
This scenario describes studying for an economics course without applying the scarcity principle: Mary studies two hours for every one hour she is in the classroom
40.
what does the price elasticity of demand measure?
41.
What is the long-run consequence of a price floor law?
42.
What is the purpose of a cost-benefit analysis of a public good?
43.
What will happen in a market where a binding price ceiling is removed?
44.
when a tax is imposed on some good, what happens to the amount of the good bought and sold?
45.
When looking at a supply and demand graph, you would find producer surplus
46.
When the price elasticity of demand is elastic, a consumer is
47.
when the price of softballs is high, a ___ in price will raise total revenue. when the price is low, the seller should____ the price to increase total revenue
48.
when would oil producers see the largest % decline in the quantity demanded for oil due to increase in the price of oil today? In a month or in a year?
49.
Who potentially benefits from a price floor?
50.
Why do government leaders impose price controls?
51.
why do government leaders impose price controls?
52.
why is raising the minimum wage generally ineffective?
