Micro Econ Exam 1

What section of a​ straight-line demand curve is​ elastic? A. at no points. B. at the midpoint. C. at all points below the​ curve's midpoint. D. at all points above the​ curve's midpoint. E. at some random points.

at all points above the​ curve's midpoint.

​Market:​ Strawberries, ​Event: Consumers expect prices to fall. Demand or Supply

Demand

​Market: Advertising​ Industry, ​Event: More firms enter the market. Demand or Supply

Supply

​Market: Air​ Travel, ​Event: Labor costs increase. Demand or Supply

Supply

​Market: Cough​ Medicine, ​Event: Labeling requirements are passed. Demand or Supply

Supply

​Market: ​Furniture, ​Event: Transportation costs rise. Demand or Supply

Supply

​Market: ​Oil, ​Event: Producers expect prices to rise. Demand or Supply

Supply

​Market:​ Automobiles, ​Event: Labor productivity improves. Demand or Supply

Supply

It is appropriate to use the supply and demand model​ if, in a​ market, A. costs of trading are low. B. firms sell identical products. C. everyone is a price taker with full information about the price and quality of the good. D. All of the above.

All of the above.

In tracing out a​ price-consumption curve​ (PCC) for good​ X, which of the following variables is held​ constant? A. Consumer income B. The price of good X C. Consumption of all other goods. D. Consumer satisfaction​ (utility)

Consumer income

​Market: Laptop​ Computers, ​Event: Consumer incomes rise. Demand or Supply

Demand

​Market: Laptop​ Computers, ​Event: Price of desktop computers increases. Demand or Supply

Demand

What is the effect of a​ 50% income tax on​ Dale's budget line and opportunity​ set? A​ 50% income tax A. steepens the budget​ line, increasing the opportunity set. B. shifts the budget line​ inward, decreasing the opportunity set. C. does not affect the budget​ line, but decreases the opportunity set. D. kinks the budget​ line, decreasing the opportunity set. E. rotates the budget line inward​, decreasing the opportunity set.

Shifts the budget line​ inward, decreasing the opportunity set.

According to the Law of​ Demand, the demand curve for a good​ will: A. shift leftward when the price of the good increases. B.slope downward. C. slope upward. D.shift rightward when the price of the good increases.

Slope Downward

Which of the following is​ true? A. The​ supply-and-demand model always applies in goods​ markets, but only sometimes applies in service markets. B. The​ supply-and-demand model always applies in service​ markets, but only sometimes applies in goods markets. C. The​ supply-and-demand model is appropriate for analysis under certain conditions. D. The​ supply-and-demand model is always appropriate for analysis.

The​ supply-and-demand model is appropriate for analysis under certain conditions.

A decrease in the price of a good will lead​ to: A. a movement down along the supply curve for that good. B. a leftward shift of the supply curve for that good. C. a rightward shift of the supply curve for that good. D. a movement up along the supply curve for that good.

a movement down along the supply curve for that good

An increase in the price of a good will lead​ to: A. a movement up along the demand curve for that good. B. a leftward shift of the demand curve for that good. C. a rightward shift of the demand curve for that good. D. a movement down along the demand curve for that good.

a movement up along the demand curve for that good

A decrease in​ consumer's income will lead​ to: A.a rightward shift of the demand curve for a an inferior good. B. a rightward shift of the supply curve for an inferior good. C. no change of the demand curve for an inferior good. D. a movement upward along the demand curve for an inferior good.

a rightward shift of the demand curve for a an inferior good.

An increase in​ consumer's income will lead​ to: A. no change of the demand curve for a normal good. B. a rightward shift of the supply curve for a normal good. C. a rightward shift of the demand curve for a normal good. D. a movement upward along the demand curve for a normal good.

a rightward shift of the demand curve for a normal good.

A decrease in production costs will lead​ to: A. a rightward shift of the demand curve for this good. B. a rightward shift of the supply curve. C. no change of the supply curve. D. a movement upward along the supply curve.

a rightward shift of the supply curve

What is the primary reason why indifference curves are convex to the​ origin? A. an indifference curve passes through every possible bundle. B. bundles farther from the origin are preferred to those closer to the origin. C. consumers have a diminishing marginal rate of substitution. D. most goods for consumers are not perfect complements E. indifference curves frequently intersect one another.

consumers have a diminishing marginal rate of substitution.

Governments often use a sales tax to raise tax revenue​, which is the tax per unit times the quantity sold. A specific tax will raise more tax revenue if the demand curve is A. elastic because the quantity demanded will decrease by more. B. inelastic because the tax incidence will be lower. C. elastic because the quantity demanded will not decrease. D. inelastic because consumers will be less sensitive to price. E. elastic because the demand curve will be steeper.

inelastic because consumers will be less sensitive to price.

If the demand curve for a good is horizontal and the price is​ positive, then a leftward shift of the supply curve results in A. a decrease in price. B. a price of zero. C. no change in price. D. an increase in price

no change in price.

For changes in the price of good X​ (holding income and the price of good Y​ constant), a vertical price consumption curve​, corresponds to​ a: A. constant and unitary elasticity of demand. B. typical​ downward-sloping demand curve. C. perfectly elastic demand curve. D. perfectly inelastic demand curve.

perfectly inelastic demand curve.

The change in price that results from a leftward shift of the supply curve will be greater if A. the demand curve is relatively flat than if the demand curve is relatively steep. B. the demand curve is relatively steep than if the demand curve is relatively flat. C. the demand curve is horizontal than if the demand curve is vertical. D. the demand curve is horizontal than if the demand curve is downward sloping.

the demand curve is relatively steep than if the demand curve is relatively flat.

If an indifference curve is upward​ sloping, then A. the property of transivity is violated. B. no property is violated. C. the property of more is better is violated. D. the property of completeness is violated.

the property of more is better is violated.

If indifference curves are​ thick, then A. the property of transivity is violated. B. no property is violated. C. the property of more is better is violated. D. the property of completeness is violated.

the property of more is better is violated.

If indifference curves​ cross, then A. the property of transivity is violated. B. no property is violated. C. the property of more is better is violated. D. the property of completeness is violated.

the property of transivity is violated.

Consumers and firms are known as price takers only if A. They can set the market price. B. no market exists to determine the equilibrium price. C. they cannot affect the market price. D. excess demand exists.

they cannot affect the market price.