Microeconomics Chapter 5-7

When the price of a good increased by 10 percent, the quantity demanded of it decreased 2 percent. The price elasticity of demand is ____. A price rise will ____ total revenue. An example of a good with such demand is____.

0.20: increase: clothing

Which of the following statements is an example of price elasticity of supply?

A 10 percent fall in the price of turkey with no other change decreases quantity supplied by 12 percent.

Which one of the following statements describes an elastic supply?

A rise in the price of tomatoes by 10 percent increases the quantity supplied by more than that.

Which one of the following illustrates a unit elastic supply?

Dan says that a 10 percent rise in the price of movie tickets decreases the quantity of movie tickets demanded by proportion.

Which of the following statements illustrates an inelastic supply?

Farmers have not been able to respond to a rise in the price of peas.

Which method is used to allocate goods at a department store in the post-holiday sales?

First-come, first served

In a day in the life of Jack, the following four things occur. Which is an example of resources being allocated by the command system?

His manager at McDonalds puts him on the drive-through window.

Which of the following statements describes perfect elastic supply?

The demand for pears increases by 800 percent, but Kroger continues to sell them at an unchanged price.

The elasticity of supply of roses is 1.8 The market for roses,

a 10 percent increase in the price increases the quantity of roses supplied by 18 percent.

All of the following are true except

a good with a perfectly elastic supply has a vertical supply curve.

Suppose the price of tomatoes fell from $58 a crate to $22 a crate. A typical tomato farmer supplies 308 crates a day at $58 a crate, but at $22 a crate would supply 92 crates a day. a) The price elasticity of supply of tomatoes is b) If the price of tomatoes remains at $22 a crate, the elasticity of supply will ___ over the coming years.

a) 1.2 b) become more elastic

When the price of a diamond ring rises from $2,000 to $3,000, the quantity demanded decreases from 13,000 to 7,000. a) The percentage change in price of a diamond ring is ___ percent? b) The percentage in the quantity of diamond rings demanded is ___ percent. c) The price elasticity of demand for diamond rings is ___.

a) 40% b) 60% c) 1.5%

One winter recently, the price of a cruise increased by 10 percent and the quantity demanded decreased by 15 percent. Use the total revenue to determine whether the demand of a cruise is elastic or inelastic. a)Total revenue___ because the percentage increase in the price is ____ than the percentage decrease in the quantity demanded. b) Because the total revenue and the price change in ____, the demand for a cruise is ____.

a) decrease: less b) opposite directions: elastic

Suppose the price of tomatoes fell from $58 a crate to $22 a crate. A typical tomato farmer supplies 308 crates a day at $58 a crate, but at $22 a crate would supply 92 crates a day. a) The supply of tomatoes is b) Everything else remaining the same, production possibilities ____ the price elasticity of supply of tomatoes. Storage possibilities ____ the price elasticity of supply of tomatoes.

a) elastic b) increase: do not influence

A 2 percent increase in the price of a good increased the quantity supplied of the good by 10 percent after one month. a) Supply of this good is ______ b) The good is most likely produced using factors of production that are______ c) The price elasticity of supply of this good is ___.

a) elastic b) plentiful or easily obtained. c) 5

AC/DC's Black Ice tour breaks records down under. The 40,000 tickets for the March 6 gig sold out in seven minutes- a record. Many people who camped out overnight missed getting a ticket. a) The ____ method is used to allocate the concert tickets. b) This allocation of tickets is ____.

a) first come, first served b)efficient if concert-goer's willingness to pay equals the marginal cost of providing one more seat

When the price of a cruise rises from $19,500 to $20,500, the quantity demanded decreased from 2,100 to 1,900 travelers. a) The demand for cruises is elastic. b) The demand for cruises on the Princess line ____ the demand for cruises.

a) true b) is more elastic than

During the civil war, families of wounded soldiers traveled to the towns near the battle sites. People in the towns offered rooms for rent in their home at the highest amount that people were willing to pay. a)The consumer surplus from the rented rooms is received by___? b) The producer surplus from the rented rooms is received by____?

a)the people who occupy the rooms b) the owners of the houses

When a market price allocates a scarce resource, the people who ____ get the resource.

are willing and able to pay that price

A ____ system allocates by the order of someone in authority.

command

All of the following are sources of inefficiency except: -Price and quantity regulations -monopoly -taxes and subsides -competition

competition

An earthquake destroys the homes of a quarter of a city's population. People who are lucky enough town to own one of the remaining homes offer rooms for rent at the highest amount that people who are willing to pay. The outcome is___ because____.

efficient, the people who value the rooms most highly use them.

Price elasticity of demand is not

equal to the slope of a demand curve.

Price elasticity of demand is not____

equal to the slope of the demand curve

When the price of a good increased by 3 percent, the quantity demanded of it decreased 6 percent. Demand for this good is ____

inelastic.

When the price of a good increased by 3 percent, the quantity demanded of it decreased 6 percent. Most likely, this good _____ and ____.

is a luxury, has good substitutes.

Which method is used to allocate the position of city mayor?

majority rule

Pianos and piano lessons are complements. The cross elasticity of demand for piano lessons with respect to the price of the piano is

negative.

The factors that influence the elasticity of supply of a good include

storage possibilities and the time elapsed since the price of the good changed.

At McDonalds, no reservations are accepted, at Panorama Restaurant in St. Louis Art Museum, reservations are accepted, at Niche, reservations are essential. The restaurants don't used market price to allocate their tables because______.

the price of a table would fluctuate hourly, customer uncertainty would deter patrons, and lower demand would bring lower profit

Allocative efficiency is a situation in which the quantities of goods and services produced are those that people ___ -it is not possible to produce more of a good or service___ some of another good that people____.

value most highly: without giving up: value more highly