Micro Test 1
a.
. For which of the following goods is the income elasticity of demand likely lowest? a. water b. sapphire pendant necklaces c. filet mignon steaks d. fresh fruit
a.
If a firm is a price taker, it operates in a a. competitive market. b. monopoly market. c. oligopoly market. d. monopolistically competitive market.
a.
Which of the following is likely to have the most price inelastic demand? a. athletic shoes b. running shoes c. Nike running shoes d. Nike Shox running shoes
d.
. Which of the following events must cause equilibrium quantity to rise? a. demand increases and supply decreases b. demand and supply both decrease c. demand decreases and supply increases d. demand and supply both increase
a.
A bagel shop sells fresh baked bagels from 5 a.m. until 7 p.m. every day. The shop does not sell day-old bagels, so all unsold bagels are thrown away at 7 p.m. each day. The cost of making and selling a dozen bagels is $1.00; there are no costs associated with throwing bagels away. If the manager has 8 dozen bagels left at 6:30 p.m. on a particular day, which of the following alternatives is most attractive? a. Lower the price of the remaining bagels, even if the price falls below $1.00 per dozen. b. Lower the price of the remaining bagels, but under no circumstances should the price fall below $1.00 per dozen. c. Throw the bagels away and produce 8 fewer dozen bagels tomorrow. d. Starting tomorrow, lower the price on all bagels so they will all be sold earlier in the day.
b.
A leftward shift of a demand curve is called a(n) a. increase in demand. b. decrease in demand. c. decrease in quantity demanded. d. increase in quantity demanded.
True
A price change causes the quantity demanded of a good to increase by 15%, while the total revenue of that good increases by 10%. True or False: The demand curve is elastic in this region.
b.
Another term for equilibrium price is a. dynamic price. b. market-clearing price. c. quantity-defining price. d. balance price.
b.
Consider Frank's decision to go to college. If he goes to college, he will spend $21,000 on tuition, $11,000 on room and board, and $1,800 on books. If he does not go to college, he will earn $16,000 working in a store and spend $7,200 on room and board. Frank's cost of going to college is a. $33,800. b. $42,600. c. $49,800. d. $57,000.
a company that must accept the prevailing prices in the market of its products, its own transactions being unable to affect the market price.
Define Price taker
d.
Government policies can change the costs and benefits that people face. Those policies have the potential to a. alter people's behavior. b. alter people's decisions at the margin. c. produce results that policymakers did not intend. d. All of the above are correct.
b.
In economics, capital refers to a. the finances necessary for firms to produce their products. b. buildings and machines used in the production process. c. the money households use to purchase firms' output. d. stocks and bonds.
%change in Qd/% change in income
Income elasticity of demand
a.
Juanita and Shantala run a business that programs and tests cellular phones. Assume that Juanita and Shantala can switch between programming and testing cellular phones at a constant rate. The following table applies. . Refer to Table 3-29. Juanita's opportunity cost of programming one cellular phone is testing a. 7.5 cellular phones and Shantala's opportunity cost of programming one cellular phone is testing 5/2 cellular phones. b. 2/15 cellular phones and Shantala's opportunity cost of programming one cellular phone is testing 5/2 cellular phones. c. 7.5 cellular phones and Shantala's opportunity cost of programming one cellular phone is testing 2/5 cellular phones. d. 2/15 cellular phones and Shantala's opportunity cost of programming one cellular phone is testing 2/5 cellular phones.
Price and Quantity have an inverse relationship. (P goes up, Q goes down)
Law of demand
((Q2-Q1)/[(Q1+Q2)/2])/((P2-P1)/[(P1+P2)/2])
Midpoint method formula
b.
New oak tables are normal goods. What would happen to the equilibrium price and quantity in the market for oak tables if the price of maple tables rises, the price of oak wood rises, more buyers enter the market for oak tables, and the price of the glue used in the production of the new oak tables increased? a. Price will fall, and the effect on quantity is ambiguous. b. Price will rise, and the effect on quantity is ambiguous. c. Quantity will fall, and the effect on price is ambiguous. d. Quantity will rise, and the effect on price is ambiguous.
a.
Refer to Figure 2-9, Panel (a). Production is a. possible at points J, K, L, and M, but efficient only at points J, L, and M. b. possible at points J, K, L, and M, but efficient only at point K. c. possible at points J, L, M, and N, but efficient only at points J, L, and M. d. possible at points J, L, M, and N, but efficient only at point N.
c.
Refer to Figure 4-18. At a price of $35, there would be a a. shortage of 400 units. b. surplus of 200 units. c. surplus of 400 units. d. surplus of 600 units.
b.
Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for orange juice of an announcement by the American Dental Association that orange juice erodes tooth enamel? a. Point A to Point B b. Point C to Point B c. Point C to Point D d. Point A to Point D
c.
Refer to Figure 4-4. If Yasmine and Mercedes are the only two consumers in the market, then the market quantity demanded at a price of $12 is a. 3 units. b. 6 units. c. 9 units. d. 12 units
d.
Refer to Figure 5-9. Using the midpoint method, the price elasticity of demand between point A and point B is a. 0.33. b. 0.5. c. 2.0. d. 3.0.
a.
Refer to Table 3-29. Shantala has an absolute advantage in a. programming cellular phones and a comparative advantage in programming cellular phones. b. programming cellular phones and a comparative advantage in testing cellular phones. c. testing cellular phones and a comparative advantage in programming cellular phones. d. testing cellular phones and a comparative advantage in testing cellular phones.
1.14
Suppose subway ridership in New York City rose by 12 percent after a fare decrease of 25 cents to $2.25. Using the midpoint method, an estimate of the price elasticity of demand for subway rides is
-Kyoko's demand is unit elastic. -Jacques's demand is perfectly inelastic. Jacques's price elasticity of demand is perfectly inelastic (equal to 0) in this case because he wants the same quantity regardless of the price.
Two drivers—Jacques and Kyoko—each drive up to a gas station. Before looking at the price, each places an order. Jacques says, "I'd like 10 gallons of gas." Kyoko says, "I'd like $10 worth of gas." Which of the following statements is correct? -Kyoko's demand is unit elastic. -Jacques's demand is perfectly inelastic. -Kyoko's demand is perfectly elastic. -Kyoko's demand is inelastic.
c.
Which of the following events could shift the demand curve for gasoline to the left? a. The income of gasoline buyers rises, and gasoline is a normal good. b. The income of gasoline buyers falls, and gasoline is an inferior good. c. Public service announcements run on television encourage people to walk or ride bicycles instead of driving cars. d. The price of gasoline rises.
b.
Which of the following should be held constant when calculating an income elasticity of demand? a. the quantity of the good demanded b. the price of the good c. income d. All of the above should be held constant.
c.
Which of the following statements is not valid when the market supply curve is vertical? a. Market quantity supplied does not change when the price changes. b. Supply is perfectly inelastic. c. An increase in market demand will increase the equilibrium quantity. d. An increase in market demand will increase the equilibrium price.
c.
You are the curator of a museum. The museum is running short of funds, so you decide to increase revenue. What should you do to increase revenue if the price elasticity of demand is 2.4? a. Nothing, revenue is maximized at current admission price b. Raise the admission price c. Lower the admission price
unit elastic (the price elasticity of demand is 1)
_____ ________demand means that the percentage change in quantity demanded equals the percentage change in price.
inferior good
a good that consumers demand less of when their incomes increase
normal good
a good that consumers demand more of when their incomes increase
|%change in Q| ≥ |%change in P|
elastic
|%change in Q| ≤ |%change in P|
inelastic