Econ exam 1

Refer to Figure 4-15. Equilibrium price and quantity are, respectively,

$25 and 400 units

When the price of a good is $5, the quantity demanded is 120 units per month; when the price is $7, the quantity demanded is 100 units per month. Using the midpoint method, the price elasticity of demand is about

0.55

If the price elasticity of supply is 1.5, and a price increase led to a 3% increase in quantity supplied, then the price increase is about

2.00%.

Refer to Table 4-2. Whose demand does not obey the law of demand?

Taboo's

Which of the following principles is not one of the four principles of individual decision-making?

Trade can make everyone better off

If the price elasticity of demand for a good is 6, then a 3 percent decrease in price results in

a 2 percent increase in the quantity demanded

Refer to the above figure. If rectangle D is larger than rectangle A, then

a decrease in price from P2 to P, will cause an no change in total revenue. demand is elastic between prices P, and Pz. the magnitude of the percent change in price between Pi and Pz is greater than the magnitude of the corresponding percent change in quantity demanded

A supply curve slopes upward because

an increase in price gives producers an incentive to supply a larger quantity.

College-age athletes who drop out of college to play professional sports

are well aware that their opportunity cost of attending college is very high

A good will have a more inelastic demand, the

broader the definition of the market.

The price elasticity of demand measures

buyers' responsiveness to a change in the price of a good

If the cross-price elasticity of two goods is negative, then the two goods are

complements.

A market supply curve is determined by

finding the average quantity supplied by sellers at each possible price.

Economics is the study of

how society manages its scarce resources.

quantity Refer to Figure 4-13. The shift from S to S' is called a(n)

increase in quantity supplied.

Two goods are complements when a decrease in the price of one good

increases the quantity demanded of the other good

If a decrease in income increases the demand for a good, then the good is a(n)

inferior good.

Suppose researchers at the Sam Houston State University discover a new vitamin that increases the milk production of dairy cows. If the demand for milk is relatively inelastic, the discovery will

lower both price and total revenues

You lose your job and, as a result, you buy fewer iTunes music downloads. This shows that you consider iTunes music downloads to be a(n)

normal good

The adage, "There is no such thing as a free lunch," is used to illustrate the principle that

people face tradeoffs

Each of the following is a determinant of demand except

production technology.

The amount of goods and services produced from each unit of labor input is called

productivity.

The law of demand states that, other things equal, an increase in

quantity demanded causes price to decrease.

Good X and good Y are substitutes. If the price of good Y increases, then the

quantity demanded of good X will increase.

Suppose the American Medical Association announces that men who shave their heads are less likely to die of heart failure. We could expect the current demand for

razors to increase

Efficiency

refers to how much a society can produce with its resources. Equality refers to how evenly the benefits from using resources are distributed among members of society.

The phenomenon of scarcity stems from the fact that

resources are limited.

An increase in quantity demanded

shifts the demand curve to the right

Refer to Figure 4-15. At a price of $30, there would be a

surplus of 200 units

People are willing to pay more for a diamond than for a bottle of water because

the marginal benefit of an extra diamond far exceeds the marginal benefit of an extra bottle of water.

For a vertical demand curve,

the price elasticity of demand is equal to 0.

Which of the following is not a determinant of demand?

the price of a resource that is used to produce the good

A decrease in the number of sellers in the market causes

the supply curve to shift to the left

Refer to Figure 5-3. Mark says he would buy one Mt. Dew per day regardless of the price. If this is true, then Mark's demand for Mt. Dew is represented by demand curve

А

Refer to Figure 5-3. The demand curve representing the demand for a luxury good with several close substitutes is

С