economic midterm 2

if the cost of making another unit is less than the revenue gained from selling another unit

a rational seller will sell another unit of output...

2; 6

a single consumer's demand for ice cream at the student union. fran is one of the students whose demand curve for ice cream. when price is $4.00, fran demands ________ scoops for a week, and when price is $2.00, fran demands ________ scoops...

1/2

what is the slope of the supply curve?

positive

when calculating price elasticity of demand, if the percentage change in price is negative, then the percentage change in quantity demanded is typically...

1/3; 2/3

when p=4, the price elasticity of demand for the demand curve d1 is _______ and d2 is ________....

perfectly inelastic

if the percentage change in quantity demanded is zero for any percentage change in the price of the good, then demand is classified as...

unit elastic

if the price elasticity of demand for a good equals one, then the demand for that good is...

3% decrease in the quantity of pineapples demanded

if the price elasticity of demand for pineapples is 0.75, then a 4% increase in the price of pineapples will lead to a...

total expenditure would decrease

if the price of a latte increases from $2.00 to $2.50...

inelastic

if the price of textbooks increases by one percent and the quantity demanded falls by one-half percent, then demand for textbook is...

it decreases

if the price rises from $10 to $14, what will happen to the price elasticity of supply?

rises, less of the activity will occur

the law of demand indicates that as the cost of an activity...

quantity supplied; increase in supply

an increase in consumers' demand for espresso will lead to an increase in ______, while an increase in the number of firms producing espresso will lead to a(n) ______...

more price elastic

antony's pizza uses the same dough, sauce, and cheese for pizza and calzones. when the price of pizza is low antony produces more calzones. For antony, the supply of pizza is ______ compared to the supply at a pizza restaurant that does not serve calzones...

lower

assume the price of gasoline doubles tonight and remains at that price for the next two years. compared with the long-run price elasticity of demand for gasoline, the short-run price elasticity of demand for gasoline will be _______...

normal goods

during recessions, when some workers lose their jobs and have lower incomes, sales of durable goods (goods with a life expectancy of 3 years or more) decline. apparently, durable goods are...

increase

for a given seller, the relationship between the number of units produced and the opportunity cost of producing an additional unit of output. as the market price of this good increases, the quantity produced by the seller will________....

food

for which of the following products is demand likely to be least elastic with respect to price...

16 doughnuts

fran runs a doughnut shop in a tiny 3-person town. the table below shows the quantity demand by the three townspeople at various prices. price per doughnut/quantity demanded by al/quantity demanded by betty/quantity demanded by carol 10 cents 10 4 6 25 cents 9 2 5 35 cents 7 1 5 50 cents 5 0 1 when the price of a doughnut is 25 cents, what is the market demand for doughnuts?

marginal cost will eventually increase

if a production process exhibits diminishing returns, then as outputs rises...

perfectly elastic

if consumers completely cease purchasing a product when its price increases by any amount, then demand is...

the price elasticity of demand at the original price was greater than one

if consumers respond to a 10% price reduction by buying twice as much of a particular good, we would conclude that...

substitutes

if cross-price elasticity of demand between two goods is positive, the two goods are...

a decrease in the firm's supply

if crude oil is a variable factor of production for a firm, then an increase in the price of crude oil will lead to...

$1.00 per pound

if laura and chris are the only two consumers in this market, then the market demand for hamburger will be 9 pounds per week when the price of hamburger is...

decrease; 40

if mallory and rick are the only two consumers in this market and the price of soda increases from $0.75 to $1.00 per can, the quantity of soda demanded in the market will________ by_______ cans per month...

50

if mallory and rick are the only two consumers in this market and the price of soda is $0.75 per can, then what will be the market demand for soda each month?

decreases by 3%

if the absolute value of price elasticity of demand for cell phone service is 3, then if the price of cell phone service increases by 1%, quantity demand would...

0.3

if the absolute value of slope of the demand curve is 2.5, price is $6 per unit, and the quantity demanded is 8 units, when the price elasticity of demand is...

2%

if the absolute value of the price elasticity of demand for tickets to a football game is 2, then if the price increases by 1%, quantity demanded decreases by...

not change the quantity demanded

if the demand curve for a good is a vertical line at q=1, then a decrease in the price of that good will...

many close substitutes

if the demand for a good is highly elastic, that good is likely to have...

negative; complements

if the demand for salad dressing increases when the price of lettuce decreases, the cross-price elasticity of demand between salad dressing and lettuce will be _______ because these two goods are ________...

a 5% increase in the price leads to a 7% decrease in quantity demanded

if the elasticity of demand for the latest american idol album is 1.4, this means...

water production is characterized by increasing opportunity costs

in 1985 a desert community stopped pumping water from a 1000 foot well because it had run dry. in 2005 the price of water doubled. the community then drilled the well deeper and started pumping again. in this community...

marginal cost equals price

in general, perfectly competitive firms maximize their profit by producing the level of output at which...

upward; of increasing opportunity costs

individual supply curves generally slope ________ because _________...

4

it is clear that diminishing returns sets in after ________ workers per day number of workers per day/output per day 0 0 1 3 2 8 3 15 4 24 5 32 6 39

keeps the price of her lemonade the same and increases the output

jenny sells lemonade in front of her house in the summer. several other kids in jenny's neighborhood also run lemonade stands in the summer. if the lemonade market is perfectly competitive and jenny is charging the equilibrium price, then jenny can increase her revenue if she...

$1

john is indifferent between the two tasks, and the number of windows he can clean depends on how many hours he spends cleaning in a day. hours per day cleaning windows/total number of windows cleaned 0 0 1 7 2 11 3 14 4 16 5 17 what is the lowest price per window that would induce john to spend at least one hour per day cleaning windows?

$14

john is trying to decide how to divide his time between his job as a stocker at the local grocery store, which pays $7 per hour for as many hours as he chooses to work, and cleaning windows for the businesses downtown. he makes $2 for every window he cleans. john is indifferent between the two tasks, and the number of windows he can clean depends on how many hours he spends cleaning in a day. hours per day cleaning windows/total number of windows cleaned 0 0 1 7 2 11 3 14 4 16 5 17 john's benefit from his first hour cleaning windows...

the market for vegetables is perfectly competitive

last year, casey grew fresh vegetables, which she sold at her local farmers market, but this year, casey did not plant any vegetables and went to work at a bank instead. if casey's decision to change careers did not affect the price of vegetables at the farmers market, then this suggests that...

increased; was reduced

pepsi one is a close substitute for diet coke. when pepsi introduced pepsi one, the price elasticity of demand for diet coke ________ and coke's ability to raise revenues through price increases ________....

became more elastic

satellite tv is a close substitute for cable tv. in the 1990s, small satellite tv units were developed that made it less costly for individual consumers to subscribe to satellite tv service. this caused the price elasticity of demand for cable tv service to...

$176

suppose a firm uses workers and office space to produce output. the firm is locked into a year-long lease on its office space, but it can easily vary the number of employee-hours it uses each day. the relationship between the number of employee-hours the firm uses each day and the firm's daily output. each unit of output sells for $2, the hourly wage rate is $14, and the rent on the office space is $50 per day. employee-hours per day/output per day 0 0 1 40 4 80 9 120 15 160 23 200 when the firm uses 9 employee-hours, its total cost each day is...

increase production

suppose a perfectly competitive firm is producing 37 units output, and the marginal cost of the 37th unit is $3. if the firm can sell each unit of output for $5 and the firm's revenue is sufficient to cover its variable cost, the firm should...

earn a smaller profit

suppose a profit-maximizing firm in a perfectly competitive market is earning an economic profit of $1,345. if the firm's fixed cost increases from $200 to $300, the firm will...

3/4; inelastic

suppose an increase in the price of golf clubs from $75 to $125 leads to an increase in quantity supplied from 200 units to 300 units. the price elasticity of supply for golf clubs at the original price of $75 is ______, so supply is ______...

4

suppose chris is a potter who makes mugs. his total costs depend on the number of mugs he makes each day. 0 $10 1 $14 2 $19 3 $25 4 $32 5 $40 6 $49 if the market for mugs is perfectly competitive, and mugs sell for $7.50 each, then Chris should make ________ mugs per day...

3

suppose sarah owns a small company that makes wedding cakes. sarah's total cost varies depending on the number of wedding cakes she makes each day. 0 $100 1 $180 2 $220 3 $300 4 $400 5 $520 6 $660 if the market for wedding cakes is perfectly competitive, and wedding cakes sell for $95 each, then sarah should produce _________ cakes per day...

the line labeled a; the line labeled b

suppose that a new drug has been approved to treat a life-threatening disease. prior to approval of this drug, the only treatment for this condition was any one of several non-prescription, or over the counter, pain relievers. demand for the new drug is ________ while demand for one brand of the over-the-counter pain relievers is _________.....

2000; 3750

suppose that at a price of 25 cents per orange, 500 consumers each demand 4 oranges, and at a price of 20 cents per orange, 750 consumers each demand 5 oranges. therefore, the market demand for oranges is ________ at a price of 25 cents per orange and _______ at a price of 20 cents per orange...

the cross-price elasticity between plane tickets and train tickets is positive

suppose that if the price of plane tickets increased, more people would choose to travel by train. if this happened, you know that...

should not shut down if its total variable cost is less than $750

suppose that when a perfectly competitive produces 500 units of output a day, it earns an economic loss. if the price of each unit of output is $1.50, then, in the short-run, its clear that this firm...

less elastic than

suppose two demand curves intersect and so have a point in common. at that point, demand shown by the steeper curve will be ________ the flatter curve...

the elasticity of supply of cupcakes is relatively high

the inputs used to produce cupcakes (e.g., flour, sugar, butter, and labor) are also used to produce cookies, cakes, muffins, pies and many other goods. this suggests that...

2; 1/2

the absolute value of the slope of demand curve d1 is_________, and the absolute value of the slope of demand curve d2 is ________....

price of the good is greater than its marginal cost

the cost-benefit principle tells us that a firm should continue to expand production as long as...

greater than one

the demand for a good is elastic if the price elasticity of demand is...

large cars with poor gas mileage will be less popular in england than in the u.s.

the fact that the average price of a gallon of gasoline is much higher in england than in the u.s. leads to which of the following predictions...

a period of time sufficiently long that all factors of production are variable

the long-run is best defined as...

5/2

the price elasticity of demand at point a is...

the change in quantity demanded of a good that results from a change in its price

the price elasticity of demand is a measure of...

cross-price elasticity of demand

the responsiveness of the quantity demanded of one good to a change in the price of a different good is measured by the...

1;2

to increase output from 33 to 66 units require _________ extra employee-hour(s); to increase output from 66 to 99 units require _________ extra employee-hour(s)... output per day/number of employee hours per day 0 0 33 1 66 2 99 4 132 7 165 11

experiencing diminishing returns

to produce 150 units of output, a firm must use 3 employee-hours. to produce 300 units of output, the firm must use 8 employee-hours. apparently, the firm is...

profit

total revenue minus both explicit and implicit costs defines a firm's...

perfectly inelastic

when the price of insulin is $10, consumers demand 100 units; when the price is $15, consumers demand 100 units; and when the price is $20, consumers demand 100 units. based on this information, the demand for insulin is...

the size of the seating area

which of the following is the most likely to be a fixed factor of production at a pizza restaurant...

is an inferior good

you have found data that indicates that the income elasticity of demand for generic (unbranded) shampoo is -0.7. you should conclude that generic shampoo...

the long-run supply of food is perfectly inelastic...

you read online that, at current rates of production, the yearly world supply of food is sufficient to feed the projected 2050 population of earth, but that after 2050 there will be massive starvation. this prediction appears to assume that...

the value of one hour of leisure, which is greater than zero

your neighbors have offered to pay you to look after their dog while they are on vacation. it will take you one hour per day to feed, walk, and care for the dog, which can you do either before or after you go to work. your regular job pays $10, and you can work up to eight hours per day. the smallest amount of money you would accept to look after your neighbor's dog is equal to...