ECON 1,2,6

Ceteris Paribus is a Latin phrase used in economics that means:

"everything else held constant"

What is the interval (arc) elasticity for demand if price is increased from $7 to $9 and the resulting quantity demanded decreases from 2,000 units to 1,800 units.

-0.42

The demand for a good is unitary elastic if _______.

A 5% increase in price has no effect on total revenue

Which of the following would increase the supply of corn?

A fall in the future expected price of corn

If demand is inelastic, then _____.

An increase in price raises total revenue

Which of the following causes a change in supply?

An increase in the cost of production

A rightward shift of an entire demand curve could be the result of an increase in

An increase in the price of a substitute

The perfect elasticity demand curve is ______.

Horizontal

A good that is unique with no close substitutes and is in high demand would likely be _____.

Inelastic

If the quantity demanded of iPhones decreases by 10% as a result of a price increase of 20%, the elasticity of demand for iPhones is

Inelastic

The elasticity coefficient for a product is -0.83. Is the demand for this product elastic, inelastic or unitary elastic?

Inelastic

If demand is _____ , then price reductions will _____ total revenue.

Inelastic, reduce

Along a downward demand curve, the elasticity of demand _______.

Is not the same

If operating in the elastic region of demand, in order to increase Total Revenue, managers should ______ price.

Lower

The Law of Demand indicates that price and the quantity demanded are ______ related

Negatively

Given the following demand and supply functions for good X, what are equilibrium price and quantity? Qd= 1500 -70P Qs= 300+50P

Pe= $10 Qe= 800

Give the following demand and supply functions for good X, what are equilibrium price and quantity? Qd= 1000-25P Qs=820 + 20P

Pe=$4 Qe=900

Typically, the slope of the supply curve is _____ and the slope of the demand curve is _____.

Positive, negative

Typically, the slope of the supply curve is ______ and the slope of the demand curve is _____.

Positive, negative

What is the monetary value of a product as established by supply and demand?

Price

_______ is a common factor that affect both supply and demand.

Price

______ is a change in the amount desired to purchases in response to a price change and is illustrated by a movement along a demand curve.

Quantity demanded

If the price of good decreases:

Quantity demanded will increase

______ is a change in the amount offered for sale in response to a price change and is illustrate by a movement along a supply curve.

Quantity supplied

If operating in the inelastic region of demand, in order to increase Total Revenue, managers should ______ price.

Raise

Changes in quantity demanded of a good that are caused by changes in its (own) price

Represent movements along a demand curve

Changes in the quantity supplied of a good that are caused by changes in its (own) price

Represent movements along a supply curve

Changes in demand for a good that are caused by changes in the determinants of demand

Result in shifts of the demand curve

Changes in supply for a good that are caused by changes in the determinants of supply

Result in shifts of the supply curve

Which set of good listed below would have the strongest case for being as example of substitute good in consumption and as an example of substitute goods in production?

Soybeans and corn

If the quantity of demand of iPhones decreases by 20% as a result of a price increase of 10%, what happens to Total Revenue (TR)?

Total Revenue decreases

If the quantity demanded for iPhones decreases by 10% as a result of a price increase of 20%, what happens to Total Revenue (TR)?

Total Revenue increases

If the quantity demanded of iPhones decreases by 20% as a result of a price increase of 20%, what happens to Total Revenue (TR)?

Total Revenue remains unchanged

If Banana Company has an elasticity coefficient of -0.61, what would happen to Total Revenue if price were decreased?

Total Revenue would decrease

If Orange Company has an elasticity coefficient of -1.61, what would happen to Total Revenue if price were decreased?

Total Revenue would increase

If Pear Company has an elasticity coefficient of -1.00, what would happen to Total Revenue if price were decreased?

Total Revenue would remain unchanged

Demand elasticity for a good can change over time.

True

If the quantity demand of iPhones decreases by 20% as a result of a price increase of 20%, the elasticity of demand for iPhones is

Unitary elastic

The elasticity coefficient for a product is -1.00. Is the demand for this product elastic, inelastic or unitary elastic?

Unitary elastic

Opportunity cost is best defined as the

Value of the next best alternative a person gives up to engage in a particular activity

The perfectly inelastic demand curve is _____.

Vertical

All of the following occurences would result in an increase in supply EXCEPT

a. An increase in the price offered for the good b. A change in expectations do that suppliers believe that prices would fall in the future c. A decline in the cost of resources used in producing the good d. An improvement in technology involved in producing the good e. An increase in the number of firms producing the good

All of the following are usually considered determinants of supply EXCEPT:

a. Income of buyers, b. Technology, c. Prices of inputs, d. expected future price, e. Price of related goods

All of the following are usually considered determinants of demand EXCEPT:

a. Price of inputs, b. Income of buyers, c. Expected future price d. Number of buyers

______ is the effect on demand that occurs when consumers demand different amounts at every price, causing the demand curve to shift to the left or the right

Change in demand

_______ is the effect on demand that occurs when consumers demand different amounts at every price, causing the demand curve to shift to the left or the right.

Change in demand

______ is caused by a shift in the supply curve; showing different amounts offered for sale at each and every possible price in the market.

Change in supply

The elasticity of demand for a good will be greater the more

Close substitutes are available

Products that are related in such a way that an increase in the price of one good increases the production of the other good are called ______.

Complements in production

The perfectly unitary demand curve is _____.

Convex to the origin

Identify the following equation as demand or supply: Q= 820 - 50P

Demand equation

If income increases, then for most goods,

Demand increases

If the price of a complement in consumption decreases, then

Demand will increase

A product that has many competing substitutes in consumption is likely to be ______.

Elastic

If the quantity demanded of iPhones decreases by 20% as a result of a price increase of 10%, the elasticity of demand for iPhones is

Elastic

The elasticity coefficient for a product is -1.39. Is the demand for this product elastic, inelastic or unitary elastic?

Elastic

Products that are related in such a way that an increase in price of one good increases the demand for the other good are called ______.

Substitutes in consumption

Identify the following equation as supply or demand: Q=1000 + 25P

Supply equation

Assume Reebok and Nike athletic shoes are substitutes in consumption. If the price of Reebok shoe rises, then

The demand for Nike shoes increases

The elasticity of demand is equal to _______.

The percentage change in quantity divided by the percentage change in price

For most goods, demand will rise when

The price of a complementary good falls

Demand is elastic if a certain percentage change in price causes ______.

The quantity demanded to change by a larger percentage

Demand is inelastic if a certain percentage change in price causes _______.

The quantity demanded to change by a smaller percentage

Demand is unitary elastic if a certain percentage change in price causes ______.

The quantity demanded to change by the same percentage

Assume wheat and corn are substitute good in production. If the price of wheat rises then

The supply of corn decreases

A decrease in demand is best described on a graph as a shift ______ of the demand curve

To the left

A decrease in supply is best described on a graph as a shift _____ of the demand curve

To the left

An increase in demand is best described on a graph as a shift _____ of the demand curve.

To the right

An increase in supply is best described on a graph as a shift ______ of the demand curve.

To the right