Econ ch 4

Price ceilings set below the equilibrium price cause

shortages

All of the following are characteristics of perfect competition EXCEPT

product differentiation.

The price elasticity of demand is a measure of

the responsiveness of the quantity demanded of a good to a changes in the price of the good

"Ceteris paribus" means

"other things constant."

A monopolist engages in price discrimination

by charging a higher price to consumers whose demand is more inelastic.

When there are very few substitutes for a good, the demand for the good will tend to be

inelastic

The total revenue of a perfectly competitive firm is calculated by

multiplying price by quantity

A market structure in which the decisions of individual buyers and sellers have no effect on market price is

perfect competition

When grocery stores issue special discount membership cards for shoppers effectively offering different prices based on quantities consumed, this is an example of

price discrimination

Price discrimination refers to

selling a product at different prices, with the price difference being unrelated to differences in marginal cost.

The price elasticity of demand measures

the consumers' sensitivity to a price change

A major difference between a monopolist and a perfectly competitive firm is that

the monopolist's marginal revenue curve lies below its demand curve

Other things being equal, demand is less elastic

the smaller the percentage of a total budget that a family spends on a good

Suppose a concert by Lady Gaga and a basketball game played by the L.A. Lakers are substitutes, then which of the following is TRUE?

If the price of a ticket to a Lakers game decreases, the quantity of Lakers tickets demanded will increase

Which of the following is NOT a characteristic of a perfectly competitive market?

It is difficult for a firm to enter or leave the market.

Suppose you are told that the equilibrium price of gasoline has increased, while the equilibrium quantity of gasoline has fallen. You are also told that either the demand changed or supply changed, but not both. Which of the following must have occurred?

Supply decreased

Which of the following is NOT a barrier to entry?

U.S. antitrust legislation

Other things being equal, suppose that the demand for wheat in constant quality units increases. The increase in demand will cause

a higher equilibrium price and higher equilibrium quantity of wheat

If an increase in the incomes of people who live in the Los Angeles area leads to an increase in the demand for season tickets for games played by the Los Angeles Lakers professional basketball team, then these season tickets are

a normal good

A monopolist is defined as

a single supplier of a good or service for which there is no close substitute.

A price floor set above a market equilibrium price causes

a surplus

Assume that coffee and tea are substitutes. Given a downward sloping demand curve for tea, an increase in the price of tea will cause

an increase in the demand for coffee

If the demand of a good is inversely related to income, it must be

an inferior good

A price taker is a firm that

annot influence the market price

If the price of hot dogs increases, the demand for hot dog buns will

decrease