Microeconomics Ch 4 Supply and Demand, and Ch 5 Elasticity of Demand

T or F If the cross elasticity of demand is negative,the two goods are substitutes.

F

T or F When the price of a pizza is $20, 10 pizzas are supplied and when the price rises to $30 a pizza, 14 pizzas are supplied. The price elasticity of supply of pizzas is 0.83.

T

The supply of beachfront property on St. Simon's Island is.... a.) elastic b.) unit elastic c.) negative d.) perfectly inelastic e.) perfectly elastic

d.) perfectly inelastic

T or F A rise in the price of a computer increases the demand for computers because a computer is a normal good.

F

T or F If the percentage change in the quantity supplied is zero when the price changes, supply is perfectly elastic.

F

T or F If the price increases by 10 percent and the quantity demanded decreases by 8 percent,the price elasticity of demand equals 1.25.

F

T or F If the quantity of ice cream demanded at each price increases, there is a movement along the demand curve for ice cream.

F

T or F If the wage rate paid to chefs rises and all other influences on selling plans remain the same, the supply of restaurant meals will increase.

F

T or F The law of demand states that other things remaining the same, if the price of a good rises, the quantity demanded of that good increases.

F

T or F The law of supply states that other things remaining the same, if the price of a good rises, the supply of the good increases.

F

T or F The price elasticity of demand equals the magnitude of the slope of the demand curve.

F

T or F The supply of a storable good is perfectly inelastic.

F

T or F Above the midpoint of a straight-line demand curve, demand is elastic.

T

T or F An inferior good has a negative income elasticity of demand.

T

T or F As the price of a good increases, if the quantity demanded of it remains the same, then demand for the good is perfectly inelastic.

T

T or F If the price of asparagus is below the equilibrium price, there is a shortage of asparagus and the price of asparagus will rise until the shortage disappears.

T

T or F If the price of coffee is expected to rise next month, the supply of coffee this month will decrease.

T

T or F If the price of tuna increases by 5 percent and the total revenue of tuna producers increases,then the demand for tuna is inelastic.

T

T or F The number of buyers of grapefruit juice increases and at the same time severe frost decreases the supply of grapefruit juice. The price of grapefruit juice will rise.

T

T or F When Sue's income increases, her demand for movies increases. For Sue, movies are a normal good.

T

The income elasticity of demand is the percentage change in the ____ divided by the percentage change in ____. a.) QD; the P of a Sub. or Complement b.) Q supplied; P c.) QD; P d.) QD; income e.) QD when income changes; the Q supplied

a.) QD; the P of a Sub. or Complement

Demand is elastic if..... a.) consumers respond strongly to changes in the product's P. b.) a larger % changed in P brings about a small % change in QD. c.) a small % change in P brings about a small % change in QD. d.) the QD is not responsive to the P changes. e.) the demand curve is vertical

a.) consumers respond strongly to changes in the product's P.

The number of buyers of sport utility vehicles, SUVs, decreases sharply. So the a.) demand curve for SUVs shifts leftward. b.) demand curve for SUVs shifts rightward. c.) demand curve for SUVs does not shift nor is there a movement along the demand curve. d.) demand curve for SUVs does not shift but there is a movement downward along it. e.) the supply curve for SUVs shifts rightward.

a.) demand curve for SUVs shifts leftward

When the percentage change in the quantity supplied exceeds the percentage change in price, then supply is... a.) elastic b.) inelastic c.) unit elastice d.) perfectly inelastic e.) perfectly elastic

a.) elastic

Teenagers demand more soda than other age groups. If the number of teenagers increases,everything else remaining the same, a.) market demand for soda increases. b.) market demand for soda decreases. c.) market demand for soda does not change. d.) there is a movement along the market demand curve for soda. e.) None of the above answers is correct because the effect on the demand depends whether the supply curve shifts.

a.) market demand for soda increases

If the costs to produce pizza increase, which will occur? a.) The supply of pizza will decrease. b.) The quantity of pizzas supplied will increase as sellers try to cover their costs. c.) Pizza will cease to be produced and sold. d.) The demand curve for pizza will shift leftward when the price of a pizza increases. e.) The demand curve for pizza will shift rightward when the price of a pizza increases.

a.) the supply of pizza will decrease

If the price of a product increases by 5 percent and the quantity demanded decreases by 5 percent, then the elasticity of demand is..... a.) 0 b.) 1 c.) indeterminate d.) 5 e.) 25

b.) 1

White bread & wheat bread are substitutes in production. A rise in the price of wheat bread will cause a.) an increase in the supply of wheat bread. b.) a decrease in the supply of white bread. c.) no change in the supply white bread. d.) a decrease in the quantity of wheat bread. e.) no change in either the supply or the quantity supplied of white bread

b.) a decrease in the supply of white bread

A rightward shift of the demand curve for pizza could be the result of a.) a rise in income if pizza is an inferior good. b.) a fall in the price of soda, a complement for pizza. c.) a decrease in the number of college students if college students eat more pizza than other age groups. d.) a rise in the price of a pizza. e.) a fall in the price of a pizza

b.) a fall in the price of soda, a complement for pizza

The measure used to determine whether two goods are complements or substitutes is called the... a.) price elasticity of supply b.) cross elasticity of demand c.) price elasticity of demand d.) income elasticity e.) sub. elasticity of demand

b.) cross elasticity of demand

The greater the amount of time that passes after a price change, the.... a.) less elastic supply becomes b.) more elastic supply becomes c.) more negative supply becomes d.) steeper the supply curve becomes e.) more vertical the supply curve becomes

b.) more elastic supply becomes

If a product is a normal good, then its income elasticity of demand is..... a.) zero b.) positive c.) negative d.) indeterminate e.) greater than one

b.) positive

Suppose that the price of lettuce used to produce tacos increases. This change means that the equilibrium price of a taco ____ and the equilibrium quantity ____. a.) rises; increases b.) rises; decreases c.) falls; increases d.) falls; decreases e.) does not change; decreases

b.) rises; decreases

Suppose the price of a movie falls from $9 to$7. Using the midpoint method, what is the percentage change in price? a.) 33 percent b.) -33 percent c.) 25 percent d.) -25 percent e.) -97 percent

c.) 25 percent

One reason supply curves have an upward slope is because a.) increased supply will require increased technology. b.) people will pay a higher price when less is supplied. c.) a higher price brings a greater profit, so firms want to sell more of that good. d.) to have more of the good supplied requires more firms to open. e.) None of the above answers is correct because supply curves have a downward slope.

c.) a higher price brings a greater profit, so firms want to sell more of that good

A rightward shift of the supply curve of pizza could be the result of a.) a rise in the price of cheese used to produce pizza. b.) a decrease in the number of firms producing pizza. c.) an increase in the productivity of the firms producing pizza. d.) a rise in the price of a substitute in production. e.) a rise in the price of a pizza.

c.) an increase in the productivity of the firms producing pizza

The technology associated with manufacturing computers has advanced enormously.This change has led to the price of a computer____ and the quantity ____. a.) rising; increasing b.) rising; decreasing c.) falling; increasing d.) falling; decreasing e.) falling; not changing

c.) falling; increasing

The price elasticity of demand is a measure of the extent to which the quantity demanded of a good changes when ____changes and all other influences on buyers'plans remain the same. a.) income b.) the price of a related good c.) the price of the good d.) the demand alone e.) both the demand and supply simultaneously

c.) the price of the good

Pizza and tacos are substitutes and the price of a pizza increases. Which of the following correctly indicates what happens? a.) The demand for pizzas decreases and the demand for tacos increases. b.) The demand for both goods decreases. c.) The quantity of tacos demanded increases and the quantity of pizza demanded decreases. d.) The quantity of pizza demanded decreases and the demand for tacos increases. e.) The demand for each decreases because both are normal goods.

d.) The quantity of pizza demanded decreases and the demand for tacos increases

The price of leather used to produce shoes rises, so the supply of shoes ____and the supply curve of shoes _____. a.) increases; shifts rightward b.) increases; shifts leftward c.) decreases; shifts rightward d.) decreases; shifts leftward e.) does not change; does not shift

d.) decreases; shifts leftward

If substitutes for a good are readily available,the demand for that good...... a.) does not change substantially if the P rises b.) does not change substantially if the P falls c.) is inelastic d.) is elastic e.) both answers a and b are correct

d.) is elastic

When income increases by 6 %, the demand for potatoes decreases by 2%.The income elasticity of demand for potatoes equals.... a.) -2.00 b.) 3.00 c.) -3.00 d.) 0.33 e.) -0.33

e.) -0.33

When the price of going to a movie rises 5%, the quantity of DVDs demanded increases 10%. The cross elasticity of demand equals..... a.) 10.0 b.) 0.50 c.) -0.50 d.) -2.0 e.) 2.0

e.) 2.0