Microeconomics Chapters 1-6

Which of the following demonstrates the law of demand?

Jayden buys more donuts at $0.25 per donut than at $0.50 per donut, other things equal.

The movement from point A to point B on the graph is caused by:

. a decrease in price.

Suppose the price of a bag of frozen chicken nuggets decreases from $6.50 to $5.75 and, as a result, the quantity of bags demanded increases from 600 to 800. Using the midpoint method, the price elasticity of demand for frozen chicken nuggets in the given price range is:

2.33

Refer to Table 1. Assume that England and France each has 40 labor hours available. If each country divides its time equally between the production of cheese and wine, then total production is

24 units of cheese and 15 units of wine.

Refer to Table 1. Which of the following combinations of cheese and wine could France produce in 40 hours?

8 units of cheese and 20 units of wine

Using the midpoint method, the price elasticity of demand for a good is computed to be approximately 0.75. Which of the following events is consistent with a 10 percent decrease in the quantity of the good demanded?

A 13.33 percent increase in the price of the good

If the price of natural gas rises, when is the price elasticity of demand likely to be the highest?

One year after the price increase

Which of the following is not a characteristic of a perfectly competitive market?

There is no free entry or exit.

When we move along a given demand curve:

all nonprice determinants of demand are held constant.

The movement from point A to point B on the graph shows:

an increase in quantity demanded.

A good will have a more inelastic demand, the:

broader the definition of the market.

Demand is said to be price elastic if:

buyers respond substantially to changes in the price of the good

The price elasticity of demand measures:

buyers' responsiveness to a change in the price of a good.

When the price of candy bars is $1.00, the quantity demanded is 500 per day. When the price falls to $0.80, the quantity demanded increases to 600. Given this information and using the midpoint method, we know that the demand for candy bars is:

inelastic.

If the price of walnuts rises, many people would switch from consuming walnuts to consuming pecans. But if the price of salt rises, people would have difficulty purchasing something to use in its place. These examples illustrate the importance of:

the availability of close substitutes in determining the price elasticity of demand.

The production possibilities frontier illustrates:

the combinations of output that an economy can produce