Unit 1 Exam (Micro)
Increase in income does what to the demand curve?
Shifts it to the left
Point above demand curve is _______. On demand curve is ____. Below the demand curve is ____.
unattainable attainable inefficient
Most inelastic demand is in...
common goods (bread)
What will shift demand curve for a good?
Decrease in price of complimentary good
Costa Rica Guatemala Pineapples 100 90 Coconuts 150 180 Opportunity cost of producing one ton of coconuts in Costa Rica? 1 ton of pineapples in Guatemala? Which country has comparative advantage in the production of pineapple?
(100/150) 2/3 a ton of pineapples (180/90) 2 tons of coconuts Costa Rica (1.5<2) (150/100<180/90)
George Jack lawn mowed 10 6 garden cultivates 5 4 What is Jack's opportunity cost of moving a lawn?
(6/10) two thirds of gardens cultivated
$100--> 11 canoes $125--> 9 canoes What is the absolute value? (midpoint value)
0.9
35 manicures and 70 pedicures or 50 manicures and 45 pedicures. If she now performs 35 manicures and 70 pedicures what is the opportunity cost of performing an additional 15 manicures?
25 pedicures
Lionel's Lawn care is a company that maintains residential yards. Lionel's cost for his standard package of mowing, edging, and trimming is $15, he charges $25 for this service. For a total price of $40, Lionel will also trim shrubs, a service that adds an additional $10 to the total cost of the standard package. Should Lionel continue to offer the shrub trimming service?
25-15=10 40-10=30 30-10=20 Yes, his marginal benefit is greater than his marginal cost
a.) shampoo and conditioner b.) iphones and earbuds c.) laptop and desktop d.) beef and pork e.) air travel and weed killer Negative cross-price elasticity is...
A &B only
Suppose the value of the price elasticity of demand is -3. What does this mean?
A 1% increase in the price of the good causes quantity demanded to decrease by 3%
Price of gold will rise in Feb., what happens to the gold market in Jan. holding everything else constant...
Demand curve shifts to the right
Sells 40 pairs of jeans at $40. When it is lowered to a price of $20, the quantity sold was increase to 60 pairs. Calculate the absolute value of the price elasticity of demand. Use the midpoint formula.
[(Q2-Q1)/(((Q2-Q1)/2)]/[(P2-P1)/((P2-P1)/2)] 0.6
Holding everything else constant, an increase in the price of MP3 players will result in ....
a decrease in the quantity of MP3 players demanded
If a country produces only two goods, it is possible to have an _____ in the production of both goods.
absolute advantage
A shift in a curve (same start point, different ending point) is the result of...
an advancement in plastic technology.
If the marginal cost from Big Ed's used for Emporium to advertise one additional day each week on a local TV station is $1,500, them Big Ed should advertise the additional day...
as long as the marginal benefit the company receives each week is just equal to or greater than $1,500
The basis for trade is ____ advantage, not _____ advantage.
comparative absolute
If the cross-price elasticity of demand for computers and software is negative, this means the two goods are...
compliments
Specializing in the production of a good or service in which one has a comparative advantage enables a country to...
consume a combination of goods that lies outside its own production possibilities frontier
To find the quantity of surplus at a certain price is where the __ and ___ are at the price.
demand and supply
If a demand curve shifts to the right then...
demand has increased
The difference in elasticity values is explained by the fact that the more narrowly we define a market the more ___ the demand will be.
elastic
Price of hamburgers decreases, families increase their purchases of ketchup...
hamburgers and ketchup are compliments
The production possibilities frontier model shows that...
if all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good.
What is the difference between "increase in demand" and "increase in quantity demanded"?
increase in demand: represented by rightward shift on the demand curve increase in quantity demanded: movement along the demand curve
A production possibilities frontier with a bowed outward shape indicates...
increasing opportunity cost as more and more of one good is produced,
For a given % increase in price, quantity demanded falls by a proportionately smaller than %, the demand is...
inelastic
Demand is inelastic, the absolute value of the price elasticity of demand is...
less than 1
For a person to have comparative advantage in producing a product, he must be able to produce that product at a ___ opportunity cost to the competitor.
lower
Economists assume that...
optimal decisions are made at the margin
A change in the following variables will change the market demand for the product except...
price of the product
The study of economies arise due to...
scarcity
Most important determinate of the price elasticity of demand of good is...
the availability of substitutes for the good
By definition, economics is the study of...
the choices people make to attain their goals, given their scarce resources.
Most people buy salt infrequently in small quantities...
the demand for salt is relatively inelastic
When the demand is elastic a fall in price causes total revenue to rise because...
the increase in quantity sold is large enough to offset the lower price