Micro ECON 1101 UMN summer 2020 Midterm

A graphical object showing the relationship between the price of a good and the amount that sellers are willing and able to supply at various prices

Supply curve

What is the amount of a good that buyerss are willing and bale to purchase at a given price?

Quantity demanded

How do we find elasticity of demand?

Ratio of percentage change in quantity over percent change in price

How to find gain of consumer?

Subtract the purchase price from the buyer value

Is there an upward or downward pressure on price when there is a surplus or excess supply?

downward pressure

When an increase in price can offset the decrease in quantity, the demand is either inelastic or elastic

its inelastic

If a shortage exists in the hamburger market, then the current price must be________ than the equilibrium price. For the market to reach equilibrium, you would expect___________________

lower buyers to offer higher prices

Do normal(essential) goods or luxury goods have more elastic demand?

luxury goods ex. diamond necklace

What are the factors that determine demand otherwise called demand shifters?

- price of a related good (complement or substitue) - Income - Taste - number of consumers - expectations

What are some determinants of price elasticity of demand?

-The availability of close substitutes -Whether the good is necessity or a luxury -How broadly you define the market -The time horizon being considered

Would a change in the expectations of consumers about prices be a movement along or shift of the curve?

A shift

Would an increase in the number of consumers be a movement along the curve or a shift?

A shift

If there is an increase in the number of producers, would there be a movement along or a shift of the supply curve?

A shift of the curve

To find market quantity demanded between two consumers, you....

Add both quantities demanded to find market quantity demanded

For an increase in the price of beef, would there be movement along or a shift of the supply curve of hotdogs?

An shift of the curve beef is used in the production of hot dogs

In an industry, (1) demand is unit elastic and (2) supply is perfectly elastic. If a tax is imposed in this industry,________ bear the entire burden of the tax and equilibrium quantity ________.

Buyers decreases

How do we find percent change in quantitiy?

Change in quantity divided by average in quantity

If the equilibrium price of an object increased, then the supply of the object______________ and the demand of the object______________

Decreased increased

The claim that, other things being equal, the quantity supplied of a good increases when the price of that good rises

Law of Supply

What is a graphical object showing the relationship between the price of a good and the amount of the good that buyers are willing and able to purchase at various prices called?

Demand curve

If you increase price of substitute good, what happens to the demand of the other product?

Demand increases (coke and pepsi)

What is a table showing the relationship between the price of a good and the amount that buyers are willing and able to purchase at various prices called?

Demand schedule

In a perfectly competitive market, all producers sell__________goods or services. Additionally, there are_________buyers and sellers. Because of these two characteristics, both buyers and sellers in perfectly competitive markets are price________________

Identical many takers

Is supply more elastic in the long or short run?

In the long run

What is the claim that, with other things being equal, the quantity demanded of a good falls when the price of that good rises?

Law of Demand

How to find producer surplus?

Market price - seller's cost

If the product is more specific (a merlot instead of any beverage) it is more or least elastic?

More elastic because there are close substitues

Would a decrease in the price of wine be a movement along or a shift of the curve?

Movement along

When demand is elastic, does price and total revenue move in the same or opposite directions?

Opposite direction

What are the supply shifters?

Price of inputs production of technology number of producers expectations of producers

The amount of a good that sellers are willing and able to supply at a given price

Quantity Supplied

A table showing the relationship between the price of a good and the amount of it that sellers are willing and able to supply at various prices

Supply schedule

If the price of a compliment good increases, what happens to the demand for the other good?

The demand decreases (hammer and nails)

When demand is inelastic, does price and total revenue move in the same or opposite direction?

The same direction

If there is an increase in the price of hot dogs, would there be a movement along or a shift of the curve?

The would be a movement along

In relation to income, for inferior goods, what direction does the curve shift to?

To the left

In relation to income, for normal goods, what direction does the curve shift to?

To the right

For high levels of quantity supplied where firms have reached near maximum capacity, supply becomes less elastic because firms may need to invest in additional capital in order to increase production further.

True

True or false, the value of the price elasticity of demand is not equal to the slope of the demand curve.

True

True or false: When both the demand and supply curve shift, the curve that shifts by the larger magnitude determines the effect on the undetermined equilibrium object.

True Larger magnitude determines the effect on price

How to find individual consumer surplus?

Willingness to pay - market price

A price ceiling is non binding when the price is ____________ the equilibrium price

above

A price ceiling is blinding when the price is____________the equilibrium price

below

In relation to total revenue, if same directions then demands is_______________

elastic

True or false, Keeping his maximum willingness to pay for an apartment in mind, kenji will buy the apartment because it would be worth more to him than its market price of 350000

false

True or false: the market for digital cable exhibits the two primary characteristics that define perfectly competitive markets.

false cable companies have monopoly over geographical locations and therefore influence the price

Suppose congress passes a tax cut that increases the income of Denver residents, If hot dogs are a normal good, this will cause the demand for hot dogs to ____________

increase

In relation to total revenue, if opposite directions then demand is_________

inelastic

In relation to total revenue, if opposite directions then demand is___________

inelastic

Suppose there is an increase of decrease in income and a good has a negative elasticity, is it a normal or inferior good?

inferior

How to find cross-price elasticity of demand?

percent change in quantity of a product demanded divided by the percent change in price of another product

How do you find total revenue?

price times quantity

How to find gain of seller?

subtract seller cost by selling price

True or false, the price elasticity of the long-run demand for oil is more elastic than the price elasticity of the short-run demand for oil.

true

Is there an upward or downward pressure on price when there is a shortage or excess demand?

upward pressure