Micro Chapter 7

If the price of apples decreases by 2 percent and causes apple consumption to increase by 4 percent, the price elasticity of demand is _____, indicating the demand is ______ 2; elastic 2; inelastic 0.5; elastic 0.5; inelastic

2; elastic

The difference between normal and inferior goods is that an increase in price will shift the demand curve for a normal good rightward and the demand curve for an inferior good leftward if the price of a normal good increases, individuals who buy it are poorer, for inferior goods, the opposite is true an inferior good is something that will not be demanded until quantities of the normal good have been exhausted an increase in income will shift the demand curve for a normal good rightward and the demand curve for an inferior good leftward

an increase in income will shift the demand curve for a normal good rightward and the demand curve for an inferior good leftward

If Ethan thinks the last dollar spent on bowling yields more satisfaction than the last dollar spent on hamburgers, and Ethan is utility-maximizing consumer, he should bowl less, so the marginal satisfaction from expenditures in this area will increase spend more on hamburgers, so total satisfaction from that activity will increase eliminate spending on hamburgers bowl more and spend less on hamburgers

bowl more and spend less on hamburgers

Residents of Leon county have developed a strong liking for barbecue pork sandwiches. Residents of Bay County buy the same amount of barbecue pork sandwiches but believe beef sandwiches are just about as good. From this, we can infer that residents of Leon county will not care what the price of barbecue pork sandwiches is compared to residents of Leon County, residents of Bay County will have a smaller price elasticity of demand for barbecue pork sandwiches compared to residents of Leon County, residents of Bay County will have a larger price elasticity of demand for barbecue pork sandwiches residents of Leon County will increase their purchases by a larger amount for beef sandwiches than residents of Bay County in response to a "50 cents off' sale on beef sandwiches

compared to residents of Leon County, residents of Bay County will have a larger price elasticity of demand for barbecue pork sandwiches

The price of an airline ticket rises as the amount of time between purchase and flight departure gets smaller. The airlines base the policy on the assumption that consumers are not aware of airline prices consumer demand is unrelated to price consumer demand becomes more elastic as departure time approaches consumer demand becomes more inelastic as departure time approaches

consumer demand becomes more inelastic as departure time approaches

If Mr. Smith thinks the last dollar spent on shirts yields more satisfaction than the last dollar spent on cola, and Smith is a utility-maximizing consumer, he should decrease his spending on cola decrease his spending on cola and decrease his spending on shirts decrease his spending on shirts increase his spending on cola and decrease his spending on shirts

decrease his spending on cola

If the price of tickets to Disney World increases 10 percent, and as a result, attendance falls by 15 percent, the demand for the tickets is elastic inelastic of unitary elasticity indeterminate

elastic

If people buy less flowers at every price when their incomes fall, then flowers are a normal good the demand for flowers is positively sloped demand for flowers has increased the price of flowers has increased there has been a decrease in population that changed demand

flowers are a normal good

If the demand for a good is elastic, then total revenue increases as price increases remains constant as quantity demanded increases increases as price decreases decreases as quantity demanded increases decreases as price decreases

increases as price decreases

If the board of regents of a major state university system plans to raise tuition in order to increase revenues, the regents must believe student demand is elastic inelastic of unitary elasticity perfectly elastic

inelastic

If bus travel is an inferior good, then its income elasticity of demand will be strictly greater than one positive equal to zero negative

negative

When demand is price inelastic, price and total revenue move in the same direction price and total revenue move in the opposite direction total revenue increases whether price goes up or down total revenue decreases whether price goes up or down

price and total revenue move in the same direction

Demand will be more inelastic when the time the consumer has to adjust to price changes is short the price of the good is high the number of good substitutes is large the consumption of the good is not very essential

the time the consumer has to adjust to price changes is short

the price of elasticity of supply will be positive when supply is elastic and negative when it is inelastic will be negative when supply is elastic and positive when it is inelastic will always be positive will be positive when demand for the good is inelastic will be positive when demand for the good is inelastic

will always be positive

a local restaurant offers an "all you can eat" barbecue special. You pay $9.00, and then you can eat as many servings as you desire at no additional cost. It would follow that you will stop eating when your marginal utility (or value) derived from eating another serving is zero your total utility (or value) derived from all of the servings consumed just equals $9.00. your marginal utility (or value) derived from another serving equals $9.00. it is physically impossible for you to eat any more

your marginal utility (or value) derived from eating another serving is zero