Economics Chapter 4, 5, & 7

-1.0

Michele, a gourmet chef, regularly visits her favorite gourmet food store every Wednesday. She always buys either domestic caviar or imported caviar, and she always spends $30, no more and no less. The imported caviar always costs twice as much as the domestic caviar. What is Michelle's price elasticity of demand for caviar?

total revenue decreasing

a 25% decrease in the price of breakfast cereal leads to a 20% increase in the quantity of cereal demanded. This results in what?

decrease in resource prices

an increase in supply could be caused by a(n)

if UMSL raises tuition it would lower enrollment because a school like UMSL is elastic for many of its students due to the many other options in this area alone. the demand shifts to the left because of the new higher price to attend UMSL

due to cuts in funding from the state legislature, UMSL is facing a multi-million dollar budget deficit. One option Chancellor George is considering to close this funding gap is an increase in tuition. Chancellor George has heard many arguments from students, faculty, staff, and members of the community as to whether or not this is a good idea. What he particularly needs now is a positive economic analysis of the idea. If UMSL were to raise tuition, what would this do to student enrollment? Why? (graph required)

1/2bh

how would you calculate the deadweight loss shown in this graph?

their cross price elasticities are greater than zero

if cola and iced tea are good substitutes for consumers, then it is likely that:

increase the quantity exchanged but result in no change in the price

if the demand curve is perfectly elastic, then an increase in supply will:

a surplus

in Figure 4-5, at a temporary price of $8, what occurs?

minimum wage laws are laws that set a minimum in the labor market. When is it a nonbinding floor?

the equilibrium wage rate is above the minimum wage rate

6 pairs

the figure to the left shows the supply and demand for socks. If a price ceiling of $10 per pair is imposed by the government, the number of pairs actually purchased will be

elasticity

the sensitivity of one economic variable to changes in another variable is known as what?

Andy's demand for beer to increase

Andy views beer and pizza as complements to one another. If the price of pizza decreases, economists would expect

1 or -1

Michelle, a gourmet chef, regularly visits her favorite gourmet food store every Wednesday. She always buys either domestic caviar or imported caviar, always spending $30. The imported caviar costs twice as much as the domestic caviar. What is Michelle's price elasticity of demand for caviar?

total revenue will decrease

a 25 percent decrease in the price of breakfast cereal leads to a 20 percent increase in the quantity of cereal demanded. As a result:

decrease in quantity demanded

a change from pont A to point B represents a(n)

increase in demand

a change from the Blue Dot to the Purple Dot represents what?

the supply curve of textbooks (which are produced using paper made from trees) will shift to the right in response to:

a decline in college tuition

elastic

a price cut will increase the total revenue a firm receives if the demand for its product is:

all else is held equal

any given demand or supply curve is based on the ceteris paribus assumption that

unit elastic

demand is said to be __________ when the quantity demanded changes the same proportion as the price

inelastic

demand is said to be _____________ when the quantity demanded is not very responsive to changes in price

both the equilibrium price and quantity will fall

many cooks view butter and margarine to be substitutes. if the price of butter falls, then in the market for margarine:

when the equilibrium wage rate is above the minimum wage rate

minimum wage laws are laws that set a wage minimum in the labor market. When is it a non-binding floor?

the supply falls, resulting in a higher equilibrium price and lower equilibrium quantity

new safety regulations increase manufacturers' costs of producing signs. What happens in the market for signs?

larger; decrease

other things being equal, a __________ supply of workers tends to _________ real wages

there is an increase in the cost of producing steel, which shifts the supply curve of steel to the left, thereby increasing the price of steel

steel mill wage costs increase by 18% over a year. What is the likely economic effect on the market for steel?

there is an increase in the cost of production, which shifts the supply curve to the left, increasing the price of steel

steel mill wage costs increase by 18% over a year. what is the likely economic effect on the market for steel?

-4.25

suppose that Bobo purchases 1 pizza per month when the price is $19 and 3 pizzas per month when the price is $15. What is the price elasticity of Bobo's demand curve?

falls by 5%

the cross elasticity of demand between DVDs and DVD players is -0.50. The price of DVD players rises by 10%. What happens to sales of DVDs?

draw four shifts (demand and supply)

the demand and supply model can be used to explain how economic events will cause changes in prices and quantities of normal goods. There are only four natural possibilities: what are they?

elastic; stays the same

the graph represents a demand curve that is relatively _________. Total revenue ________ as the price increases from $2 to $4

a shortage

the imposition of a price ceiling on a market often results in:

price

the law of supply functions in labor markets; that is, a higher ________ for labor leads to a higher quantity of labor supplied

increase

the longer the time period considered, the elasticity of supply tends to:

buyers desire to purchase less of it

the nature of the demand indicates that as the price of a good increases

30%

the price elasticity of demand for a good is -0.40. By how much must the price of the good decrease in order for sales to rise by 12%?

3%

the price elasticity of demand for a good is -4.0. By how much must the price of the good decrease in order for sales to rise by 12%?

responsiveness of quantity demanded to a change in price

the price elasticity of demand measures the:

increasing the price of game tickets because demand is inelastic

the price of elasticity of demand for tickets to local baseball games is estimated to be equal to .89. In order to boost ticket revenues, an economist would advise what?

elasticity

the sensitivity of one economic variable to changes in another variable is known as

B

the supply curve of textbooks (which are produced using paper made from trees) will shift to the left in response to: A. a decline in college tuition B. a sharp increase in the demand for and construction of wood-frame homes C. an increase in the supply of lumberjacks D. an end to government regulations that limit timber harvesting in national forests

D

the supply curve of textbooks (which are produced using paper made from trees) will shift to the right in response to: A. a sharp increase in the demand for and construction of wood-frame homes B. a decrease in the supply of lumberjacks C. an increase in the government regulations that limit timber harvesting in national forests D. a decline in college tuition

there is movement left along the demand curve

when quantity demanded decreases in response to a change in price

there is a movement right along the demand curve

when quantity demanded increases in response to a change in price:

there is movement right along the demand curve

when quantity demanded increases in response to a change in price:

-.33

when the price of a good rises by 15%, and nothing else changes, the quantity of the good demanded falls by 5%. For this price change, the price elasticity of demand for this good is:

D

which of the following best represents an example of perfect inelastic (elasticity of zero) supply)? A. a good with no substitutes in consumption B. a restaurant willing to cater any number of dishes if the price is greater than $15 a plate C. the market for collectable trading card games D. original paintings made by Leonardo Da Vinci

original paintings made by Leonardo Da Vinci

which of the following best represents an example of perfect inelastic (elasticity of zero)?

an increase in the wage rate

which of the following will not result in a leftward shift of the market demand curve for labor?

C

which of the following will not result in a leftward shift of the market demand curve for labor? A. a decrease in labor productivity B. a decrease in demand for the firm's product C. an increase in the wage rate D. a decrease in the firm's product rate

a health warning from the surgeon general that eggs have too much cholesterol

which of the following would cause a leftward shift of the demand curve in the market for fresh eggs in St. Louis?

C

which of the following would cause a leftward shift of the demand curve in the market for fresh eggs in St. Louis? A. a technological advance in the egg-producing industry B. an increase in the price of powdered eggs, a substitute for fresh eggs C. a health warning from the surgeon general that eggs have too much cholesterol D. none of the above

a technological improvement that lowers the cost of producing the computers

which of the following would increase the supply of computers?

$300

with reference to the graph shown here, at a price of $10, total revenue equals:

higher wage rates for the workers that assemble them

what is a factor that would reduce the supply of computers?

225,000

what is the value of the consumer surplus depicted in the graph?