Microeconomics Assignments Chapters 1-3

If the price elasticity of demand for bacon is 0.7, the price elasticity of demand is_____________

inelastic.

If the income elasticity of demand for lard is -3.00, this means that__________

lard is an inferior good.

If the income elasticity of demand for margarine is 2.00, this means that_____________

margarine is a normal good.

An increase in the price of a good causes a___________

movement up the supply curve.

If quantity demanded is completely unresponsive to price changes, demand is________________

perfectly inelastic.

A rightward shift of the market demand curve for MP3 players, ceteris paribus, causes equilibrium___________

price to increase and quantity to increase.

Production-possibilities curves demonstrate that_________

producing more of a good reduces the potential production of another good.

Production-possibilities frontiers demonstrate that______________

producing more of a good reduces the potential production of another good.

A change in the price of a good__________

results in change in quantity supplied.

If the cross price elasticity of demand between beer and pizza is 4.25, this means they are_____________

substitute goods.

The price elasticity of demand___________

tends to be elastic in high-price ranges and inelastic in low-price ranges.

If there is a shortage at a given price, then______________

that price is less than the equilibrium price.

The invisible hand refers to_________

the allocation of resources by market forces.

A buyer is said to have a demand for a good only when_____________

the buyer is both willing and able to purchase the good at alternative prices.

An unemployed individual decides to spend the day fishing. The opportunity cost of fishing is equal to___________

the cost of bait, any other monetary expenses, and value of the best alternative use of the individual's time.

Cross elasticity of demand measures how sensitive purchases of a specific product are to changes in_________

the price of some other product.

A market is said to be in equilbrium when_____________

the quantity demanded equals the quantity supplied.

Scarcity can best be defined as a situation in which______________

the resources we use to produce goods and services are limited.

Assume that steel is used to produce monkey wrenches. Ceteris paribus, if the price of steel rises, then__________

the supply curve for money wrenches will shift to the left.

The Latin phrase 'ceteris paribus' means that when a relationship between two variables______________

all other variables are fixed.

Assume Pepsi and Dr. Pepper are substitutes. An increase in the price of one will result in____________

an increase in the demand for the other.

Peanut butter and jelly are complements. A decrease in the price of one with result in__________

an increase in the demand of the other.

The price elasticity of demand measure______________

buyer responsiveness to price changes.

Economics is best defined as the study of__________

choices made by people faced with scarcity.

If the cross price of elasticity of demand between beer and wine is -2.50, this means they are_________

complementary goods.

If the elasticity of demand for Ipods is 3.8, this price elasticity of demand is_________

elastic.

Disney World cuts its prices to attract more visitors during the recession. The fact that Disney thinks its total revenue will increase as a result of a price decrease indicates that management believes________________

they think demand is elastic.

Economists make a distinction between changes in quantity supplied and changes in supply___________

to distinguish a movement along a supply curve from a shift in the supply curve.

Cereris paribus, which of the following is most likely to cause an increase in the quantity demanded of perfume? A. A decrease in the price of perfume. B. A decrease in tastes of perfume. C. An increase in income. D. An increase in the price of electricity.

A. A decrease in the price of perfume.

Which of the following is a microeconomic question? A. Should companies pay for employees' health insurance? B. Why do some countries have higher economic growth rates than other countries? C. Should congress and the president take action to reduce the unemployment rate? D. Should the Fed attempt to influence the interest rate to control potential inflation?

A. Should companies pay for employees' health insurance?

Ceteris paribus, which of the following would generally cause an increase in the demand for automobiles? A. A decrease in automobiles. B. An increase in consumers' income. C. The new models are perceived as ugly compared with the old models. D. Consumer expectations that the price of automobiles will lower next year.

B. An increase in consumers' income.

Which of the following is determinant of supply? A. Consumer tastes or preferences. B. The price of the factors of production. C. Income. D. Number of buyers.

B. The price of the factors of production.

An arrangement that allows buyers and sellers to exchange things is called_____________

a market.