microeconomics review

At Nick's Bakery, the cost to make a cheese danish is $1.50 per danish. As a result of selling ten danishes, Nick experiences a producer surplus in the amount of $20. Nick must be selling his danishes for

$3.50 each.

Bill created a new software program he is willing to sell for $300. He sells his first copy and enjoys a producer surplus of $250. What is the price paid for the software?

$550

Calculate percent of change: -Price decreased from 600 to 540

-10%

The price of inkjet printers increased by 25% and the quantity demanded of ink cartridges decreased by 50%. Calculate the cross-price elasticity of demand & identity the type of goods inkjet printers and ink cartridges are.

-2 complements

Calculate percent of change: -Quantity fell from 12 from 18

-33%

A price floor is

-a legal minimum on the price at which a good can be sold. -often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price floor. -a source of inefficiency in a market.

The price of Netflix increases by 40% and the quantity demanded of Blu-ray discs increases by 10%. Calculate the cross-price elasticity of demand & identify the type of goods Netflix and Blu-ray movies are.

0.25 Substitutes

Following a decrease in the supply of oranges, the price of orange juice increased by 20%, which resulted in a 10% increase in the quantity of apple juice consumed. This implies that the cross elasticity of demand between orange juice and apple juice is

0.5

If the price elasticity of demand for apples is 0.8, then a 2.4% increase in the price of apples will decrease the quantity demanded of apples by

1.92%, and apples sellers' total revenue will increase as a result.

Calculate percent of change: -Quantity increased from 300 to 360

20%

Calculate percent of change: -Price increased from $40 to $50

25%

Calculate percent of change: -Price increased from 80 to 140

75%

Calculate PED and identify whether the PED is elastic, inelastic, or unit elastic: -The price of hats increase by 10% and QD decreases by 50%

Elastic 5

If the income elasticity of demand for good X is negative and cross-price elasticity of demand between good X and good Y is negative, which of the following must be true for good X?

X is an inferior good and is a complement to Y

A binding minimum wage

alters both the quantity demanded and quantity supplied of labor.

Economists compute the price elasticity of demand as the

change in quantity demanded divided by the change in the price.

Which of the following must be true for original Michelangelo sculptures? a) The demand is relative elastic b) The supply is perfectly elastic c) The demand is perfectly inelastic d) The supply is perfectly inelastic e) The demand is perfectly elastic

d) The supply is perfectly inelastic

If the cross-price elasticity coefficient of goods A and B is -5 and the income elasticity of good A is 2, which of the following is true? a)A decrease in the price of good A will decrease the demand for good B b)An increase in income will decrease the demand for good A c) Goods A and B are substitutes d) Good B is an inferior good e) An increase in the price of A will decrease the demand of good B

e) An increase in the price of A will decrease the demand of good B

Assume that the price of good X decreases from $10 to $9 per unit and that the quantity demanded of good X increases from 25 to 30 units. In this price range, the demand for good X is

elastic

If the demand for light bulbs increases, producer surplus in the market for light bulbs

increases

Calculate PED and identify whether the PED is elastic, inelastic, or unit elastic: -The price of gasoline increases from $2 to $4 and QD decreases by 1%

inelastic 0.01

Calculate PED and identify whether the PED is elastic, inelastic, or unit elastic: -The price of water increases from $2 to $3 and QD decreases by 10%

inelastic 0.2

A seller is willing to sell a product only if the seller receives a price that is at least as great as the

seller's cost of production.

Total revenue will be at its largest value on a linear demand curve at the

top of the curve, where prices are highest.

Calculate PED and identify whether the PED is elastic, inelastic, or unit elastic: -The price of gum increases from $1 to $1.25 and QD decreases by 25%

unit-elastic 1

Consumer surplus equals the

value to buyers minus the amount paid by buyers.