Unit Two
If hot dogs are an inferior good, an increase in income will result in
A decrease in the demand for hot dogs
The Q of peanuts supplied increased from 40 tons per week to 60 ton per week when the price of peanuts increased from $4 to $5 per ton. The price elasticity of supply for peanuts over this price range is
Elastic
Which of the following will not change demand for lemons?
Change in the price of lemons
If the cross price elasticity of demand coefficient for two products is -.8 then the products are
Complements
After the government imposed a $.20 per gallon tax on gasoline the price of a gallon of gas increased from $1.00 to $1.15. Which of the following statements is true?
Consumers bear most, but not all of the tax burden
Assume product X has market price of $20 and a total revenue amount of $50,000. If price changes to $30 and total revenue, as a result of price change, increases to $80,000, what can be determined about the demand of that product?
Demand is inelastic
An art student spends all of her income on pencils and drawing pads. The student currently buys 30 pencils at $1 each and 10 pads at $5 each. If the marginal utility of the 30th pencil is 100 utils and the marginal utility of the 10th pad is 400 utils, to maximize utility the student should buy
More pencils, Less pads
If the demand for a good is perfectly price inelastic in the short run and the supply curve is upward sloping, imposing a sales tax on the good will
Not change the after tax revenues received by suppliers
Total revenue is maximized when demand is
Unit Elastic
Q of apples Total Benefits 1 10 2 18 3 24 4 28 5 30 6 31 The table above shows the total benefit tony gets from eating different quantities of apples. If the apples cost $3 each, how many should he buy to maximize his consumer surplus?
4
Given the demand curve above, if the price decreases from $8 to $4 per unit, total consumer surplus will
Increase by $18
A rise in the price of corn, a substitute good for potatoes will
Increases the demand for potatoes
