ECON Unit 2 Retake

Which of the following would most likely result in (cause) a decrease in the equilibrium price of oranges?

C. New studies suggest that oranges contain traces of cancer-causing substances due to pesticide residue

The difference between what consumers are willing to pay for units of a good and the price consumers actually pay for units of the good is called

consumer surplus

to determine whether two goods are complements one would calculate the

cross-price elasticity of demand.

suppose that the demand for vegetables is price elastic. if the price of vegetables increases by 5%, the quantity of vegetables demanded would

decrease by more than 5%

which of the following would cause the supply curve for notebook computers to shift to the right

(B)An increase in the number of firms producing notebook computers

Which of the following will cause the demand curve for good X to shift to the right?

(B)An increase in the price of good Y, a substitute for good X

If the demand for insulin is price inelastic, a 5 percent increase in the price of insulin will

(B)increase the total revenue of insulin producers

Suppose that the market supply curve for shoes is upward sloping and the market demanded curve is downward sloping. How will the imposition of a sales tax on shoes affect the consumer surplus, the producer surplus, and the total surplus

Consumer surplus: decrease Producer surplus: Decrease Total surplus: Decrease

Country Z has a downward sloping domestic demand curve and an upward sloping domestic supply curve for widgets. In the absence of trade, the domestic price of widgets is P0. Now the country engages in trade, and the price for widgets, Pw, is below the domestic price, P0. Which of the following will occur.

Domestic producer surplus will decrease in country Z

Country Z is both a producer and an importer of green tea. If country Z imposes a tariff on imports of green tea, which of the following will occur in the domestic market of green tea?

Domestic production will increase.

In the digram above, if there is a price ceiling set a P1, consumer surplus will be represented by the area

P3ACP1

which of the following helps explain why the demand curve for normal good is downward sloping

The income and substitution effects move the quantity demanded in the same direction

In the absence of market failures, a perfectly competitive market equilibrium is efficient for which of the following reasons?

Total economic surplus is maximized and all mutually beneficial transactions are exhausted.

Which of the following statements relating to income elasticity is true

With an income elasticity coefficient of 5, a 10 percent increase In income will lead to a 50 percent increase in the quantity demanded of the good

If the value of the price elasticity of supply is 3, which of the following is true

a 10 percent decrease in the price will decrease the quantity supplied by 30 percent

An increase in the supply of good x resulted in an increase in the price and quantity of good y. it can be concluded that

a complement for good x

which of the following will shift the supply curve of apples to the right

a decrease in the rental price for apple harvesting equipment

Which of the following will increase the demand for pizza, a normal good

an increase in consumers income

the quantity of peanuts supplied increased from 40 tons per week to 60 tons per week when the price of peanuts increased from $4 per ton to $5 per ton. The price elasticity of supply for peanuts over thus price range is

elastic

Given the demand curve above, if the price decreases from 8 to 4 per unit, total consumer surplus will

increase by 18

the absolute value of the price elasticity of demand for a good increases when

the price of an input used to produce the good increases

The diagram above depicts demand and supply curves in a city's rental housing market. If a price ceiling of $1,000 is imposed on the market, which of the following will occur?

the quantity of rental housing demanded will increase

If the demand for product x is perfectly elastic, and the supply of product x decreases, which of the following will occur in the market for x

total revenue will decrease

Promoters of a rock group know that if they charged $8 a ticket, 400 people would buy tickets for a concert, and if they charged $4 a ticket, 800 people would buy tickets. Over this price range, the demand for the concert tickets for the rock group is

unit elastic

which of the following best describes the law of demand

when the price of a good increases, the quantity demanded of the good decreases.