all econ hw
Figure 4-1 shows Kendra's demand for ice-cream cones curve. Use this Figure to answer the following question(s). Refer to Figure 4-1. If the market price is $2.50,what is Kendra's consumer surplus on the second ice-cream cone?
$0.50
Refer to Table 6-1. Which of the following price floors would be binding in this market?
$4
Refer to the diagram below. If this is a competitive market, price and quantity will move toward:
$40 and 150 respectively.
Refer to Table 7-1. If the price of the product is $18, then the total consumer surplus is
$46.
Refer to the table below. If demand is represented by column (2) and supply is represented by column (5), equilibrium price and quantity will be:
$8 and 60 units.
The town of Bloomfield is well known for its basketball team. The price of basketball games tickets is determined by market forces. Table 6-2 below shows the demand and supply schedules for basketball games tickets. Use Table 6-2 to answer the following question(s). Refer to Table 6-2. What is the numerical value of the price elasticity of supply?
0
Refer to Table 6-1. Suppose the government imposes a price ceiling of $5 on this market. What will be the size of the shortage in this market?
0 units
If 100 units of a good are produced when the price is $10, and 150 units are produced when the price is $15, then what is the elasticity of supply? Use the midpoint formula, and enter your answer to two decimal points.
1
Using the midpoint formula, calculate the price elasticity of portable air conditioners if an increase in price from $300 to $360 leads to an increase in the quantity supplied from 10,000 to 14,000.
1.83
Ali's Gyros operates near a college campus. Ali has been selling 120 gyros a day at $4.50 each and is considering a price cut. He estimates that he would be able to sell 200 gyros per day at $3.50 each. What is Ali's elasticity of demand? Use the midpoint formula, make your answer a positive number, and enter your answer to two decimal points.
2
Refer to Figure 6-3. The graph shows the market for Mallika's beaded purses. Following a decrease in the price of beads, Mallika was able to lower her price to $16 and increase her quantity sold to 200. Using the midpoint formula, calculate the price elasticity of demand for Mallika's beaded purses in absolute value.
2.43
Table 4-1 shows the demand and supply schedules for the low-skilled labor market in the city of Westover. The following question(s) are based on this Table. Refer to Table 4-1. The minimum wage of $7.50 results in how much unemployment?
20,000 people
Suppose that when the price per case of Bullmoose beer rises from $14 to $16, the quantity demanded falls from 300 to 200 cases per week. Using the midpoint formula, calculate the price elasticity of demand (in absolute value) over this range?
3
Refer to Table 6-1. Compared to equilibrium, how many units will be produced and sold in this market under a price floor of $5?
4 units less than equilibrium
Refer to Table 6-1. Suppose the government imposes a price ceiling of $1 on this market. What will be the size of the shortage in this market?
8 units
What is the impact of a cut in price when demand is inelastic?
A decrease in total revenue.
What is an inferior good?
A good for which demand decreases as income rises
What is a normal good?
A good for which demand increases as income rises.
Refer to the graph below. What is the impact of higher population and income growth on equilibrium in this graph?
A higher equilibrium price and higher equilibrium quantity.
Refer to Table 6-2. Which of the following statements is correct?
A price ceiling set at $5 will be binding and will result in a shortage of 125 units.
Refer to Figure 6-7. Which of the following statements is correct?
A price ceiling set at $6 will be binding and will result in a shortage of 8 units.
Refer to Figure 6-7. Which of the following statements is correct?
A price floor set at $16 will be binding and will result in a surplus of 12 units.
Refer to Table 6-2. Which of the following statements is correct?
A price floor set at $20 will be binding and will result in a surplus of 250 units.
What is the impact of a given shift in demand when supply is relatively more elastic?
A smaller increase in price.
Which of the following is a true statement?
A. The more substitutes available for a product, the greater the price elasticity of demand. B. The demand curve for a luxury is more elastic than the demand curve for a necessity. C. All of the above. D. The more time that passes, the more elastic the demand for a product becomes CORRECT ANSWER IS C. ALL OF THE ABOVE
When two goods, X and Y are complements, which of the following occurs?
An increase in the price of good X leads to a decrease in the quantity demanded of good Y.
When two goods are substitutes, which of the following occurs?
An increase in the price of good X leads to an increase in the quantity demanded of good Y.
How is the responsiveness of the quantity demanded to a change in price measured?
By dividing the percentage change in the quantity demanded of a product by the percentage change in the product's price.
How do economists avoid confusion over units in the computation of elasticity?
By using percentage changes rather than simple differences.
Refer to Figure 6-2. As price falls from PA to PB, which demand curve is most elastic?
D1
In the music CD market, what happens when: Vinyl becomes popular again!
Demand shifts left, P falls and Q falls
In the newspaper market, what happens when: The number of newspaper buyers falls as more people get their news from the internet.
Demand shifts left, P falls and Q falls
In the used car maket, what happens when: (used cars are an inferior good) Income rises as the result of an economic expansion.
Demand shifts left, P falls and Q falls
In the computer market, what happens when: Software developers create new improved gaming software.
Demand shifts right, P rises and Q rises
In the ethanol market, what happens when: Ethanol fuel becomes more popular.
Demand shifts right, P rises and Q rises
In the used car market, what happens when: (used cars are an inferior good) Used cars increase in quality.
Demand shifts right, P rises and Q rises
Which good has the least elastic demand?
Gasoline in the short run.
Use Figure 6-6 to answer the following question(s). Refer to Figure 6-6. The supply of dorm rooms on Sam's campus this school year is best represented by which diagram?
Graph B
One economist has argued that rent control is "the best way to destroy a city, other than bombing." Why would an economist say this?
He fears that rent control will eliminate the incentive to maintain buildings, leading to a deterioration of the city.
Refer to the figure below. In which case do we expect a smaller increase in the quantity of spaces supplied in response to a given increase in demand?
In the graph on the left side.
Refer to the figure below. In which of the graphs does a price decrease lead to an increase in total revenue?
In the graph on the right.
Refer to the graph below. What happens to quantity demanded in this graph?
It increases as the price decreases.
The price elasticity for a particular brand of raisin bran is, in absolute value:
Larger than the elasticity for all breakfast cereals together.
Suppose that in a free market, 15,000 patients receive a kidney transplant. Although the organ is donated to the patients, the price of a transplant is still a hefty $250,000 to cover hospital and doctors' fees. And advocate of medical care reform argues that the government should put a maximum price of $80,000 on kidney transplants to make the surgery more affordable. Suppose patients will die without a kidney transplant. What is likely to happen if a ceiling of $80,000 is imposed, ceteris paribus? Compared to the free market outcome with no government intervention.
More patients will now die from kidney problems.
An increase in quantity supplied (as distinct from an increase in supply) is depicted by a:
Move from point y to point x
A minimum wage that is set below a market's equilibrium wage will result in
None of the above is correct.
Figure 4-5 shows the market for apartments in Bay City. Recently, the government imposed a rent ceiling at R0. Use Figure 4-5 to answer the following question(s). Refer to Figure 4-5. With the rent control, the quantity supplied is Q1. Suppose apartment owners ignore the law and rent this quantity for the highest rent they can get. What is the highest rent they can get?
R1
Which of the following goods is likely to have the most elastic demand?
Restaurant Meals.
Which good has the most elastic demand?
Shell gasoline in the long run.
In the apartment market, what happens when: The building codes for apartments are strengthened, adding to building costs.
Supply shifts left, P rises and Q falls
In the apple market, what happens when: A huge infestation of worms occurs in apple orchards nationwide.
Supply shifts left, P rises and Q falls
In the beef market, what happens when: The government places a large tax on beef producers.
Supply shifts left, P rises and Q falls
In the music CD market, what happens when: CD stores close down because they are losing money.
Supply shifts left, P rises and Q falls
In the newspaper market, what happens when: The price of paper increases.
Supply shifts left, P rises and Q falls
In the apartment market, what happens when: Zoning laws are relaxed, increasing the land that can be used to build apartments.
Supply shifts right, P falls and Q rises
In the computer market, what happens when: Technological improvements lower the cost of producing computers.
Supply shifts right, P falls and Q rises
In the lecture video, which good did I say had demand that was almost perfectly inelastic?
The demand for birth attendants, such as obstetricians or midwives.
Which of the following statements about total revenue is correct?
The effect of price changes on total revenue depends on the price elasticity of demand.
Refer to the graph below. Which is most likely to happen, were a price floor of $125 to be instituted in this market?
The government could set a quota of 18.5 million printers, to prevent overproduction.
When an increase in the quantity demanded is not large enough to make up for a decrease in price, total revenue falls. Which graph is more applicable to this statement?
The graph on the left.
Refer to the graphs below. Each graph refers to the supply for printers. Which of the graphs best describes the impact of an increase in productivity?
The graph on the right.
Refer to the graphs below. Each graph refers to the supply for printers. Which of the graphs best describes the impact of an increase in the number of firms in the market?
The graph on the right.
Which of the following is true if demand is inelastic?
The price elasticity of demand will be less than 1 in absolute value.
Table 4-1 shows the demand and supply schedules for the low-skilled labor market in the city of Westover. The following question(s) are based on this Table Refer to Table 4-1. According to the lecture, what is one consequence of a minimum wage of $8?
There is increased time spent in job search.
An increase in demand accompanied by an increase in supply will increase the equilibrium quantity but the effect on equilibrium price will be indeterminate.
True
In a competitive market, every consumer willing to pay the market price can buy a product, and every producer willing to sell the product at that price can sell it.
True
When is demand price elastic?
When the percentage change in quantity demanded is greater than the percentage change in price
You have responsibility for economic policy in the country of Freedonia. Recently, the neighboring country of Sylvania has cut off all exports of oranges to Freedonia. Harpo, who is one of your advisors, suggests that you should impose a binding price ceiling in order to avoid a shortage of oranges. Chico, another one of your advisors, argues that without a binding price floor, a shortage will certainly develop. Zeppo, a third advisor, says that the best way to avoid a shortage of oranges is to take no action at all. Which of your three advisors is most likely to have studied economics?
Zeppo
When quantity demanded is completely unresponsive to price, what is the value of price elasticity of demand?
Zero.
If a supply curve is highly elastic, then a small increase in price generates ____________________:
a proportionally larger increase in quantity supplied.
In the video lecture, I said that elasticity can be thought of as which of the following?
a ratio
Refer to Figure 6-8. When the price ceiling applies in this market and the supply curve for gasoline shifts from S 1 to S 2,
a shortage will occur at the new market price of P 2.
Refer to Figure 6-2. In panel (b), there will be
a surplus of wheat
Which of the following is not likely to happen when a rent control is in place?
an increase in the supply of rentals
A recent study found that an increase in the Federal tax on beer (and thus an increase in the price of beer) would reduce the demand for marijuana. We can conclude that:
beer and marijuana are complementary goods.
A shift to the right in the demand curve for product A can be most reasonably explained by saying that:
consumer preferences have changed in favor of A so that they now want to buy more at each possible price.
When an economist says that the demand for a product has increased, this means that:
consumers are now willing to purchase more of this product at each possible price.
An increase in the price of a product will reduce the amount of it purchased because:
consumers will substitute other products for the one whose price has risen.
Suppose that when the price per case of Bullmoose beer rises from $14 to $16, the quantity demanded falls from 300 to 200 cases per week. What will happen to Bullmoose Brewery's total revenue in response to this price increase?
decrease
When the government uses price supports in agriculture:
government sometimes buys up the extra food that is produced
The imposition of a binding price ceiling on a market causes quantity demanded to be
greater than quantity supplied
According to the lecture, agricultural price supports are sometimes combined with
import restrictions, to prevent other countries from bringing the good into the home country
Assume in a competitive market that there is not enough of a good available for everyone who wishes to purchase it. We can predict that price will:
increase
If X is an inferior good, a decrease in income will:
increase D, increase P, and increase Q.
If the government removes a binding price ceiling from a market, then the price paid by buyers will
increase and the quantity sold in the market will increase.
An unusually large crop of coffee beans might:
increase the supply of coffee.
Refer to Figure 6-8. When the price ceiling applies in this market and the supply curve for gasoline shifts from S 1 to S 2, the resulting quantity of gasoline that is bought and sold is
less than Q 3
Under rent control, tenants can expect:
lower rent and lower quality housing.
A decrease in quantity demanded (as distinct from a decrease in demand) is depicted by a:
move from point y to point x.
Refer to Figure 6-2. A binding price floor is shown in
panel (b) but not panel (a).
The supply curve shows the relationship between:
price and quantity supplied.
In the housing market, rent control causes
quantity supplied to fall and quantity demanded to rise.
Suppose the supply of bicycles is price elastic. This means that suppliers
respond significantly to changes in the price of bicycles.
Jerrell's demand for pizza is price elastic. This means that Jerrell
responds significantly to changes in the price of pizza.
One can say with certainty that equilibrium quantity will increase when:
supply and demand both increase
An example of a price floor is
the minimum wage.
Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price floor of $250 per physical. As a result of the price floor,
the quantity demanded of physicals decreases and the quantity supplied of physicals increases.
If a price floor is not binding, then
there will be no effect on the market price or quantity sold.
Refer to Figure 6-4 Between points a and b on the demand curve, demand is
unit elastic.
A price elasticity of demand equals to zero indicates that the demand curve for the product is
vertical