AGEC 3003 Biswas Test 1
slope downward
1) According to the Law of Demand, the demand curve for a good will A) shift leftward when the price of the good increases. B) shift rightward when the price of the good increases. C) slope downward. D) slope upward.
change in production condition
A change in supply, or a shift in the supply curve, may result from which of the following?
Own-price and quantity demnaded
A demand curve plots the relationship between,
False
A movement along the supply curve is known as change in supply
True
A shift in the demand curve is known as " change in demand"
B. -3
4) If the demand curve for orange juice is expressed as Q = 2000 - 500p, where Q is measured in gallons and p is measured in dollars, then at the price of $3, elasticity equals A) -0.33. B) -3. C) -9. D) -17
A. elastic
5) If the demand for orange juice is expressed as Q = 2000 - 500p, where Q is measured in gallons and p is measured in dollars, then at the price of $3, the demand curve A) is elastic. B) has a unitary elasticity. C) is inelastic. D) is perfectly inelastic.
A. not very sensative to price
6) If the price elasticity of demand for a good is less than one in absolute value, economists would characterize consumers of this good A) as not very sensitive to price. B) as not very sensitive to the quantity they demand. C) as very sensitive to price. D) as elastic.
A. 2* (1000/2099)
7) The market demand for wheat is Q = 100 - 2p + 1pb + 2Y. If the price of wheat, p, is $2, and the price of barley, pb, is $3, and income, Y, is $1000, the income elasticity of wheat A) is 2 ∗ (1000/2099). B) is 2. C) is 1/2 ∗ (1000/2099). D) Cannot be calculated from the information provided.
An increase in the equalibrium price
A leftward shift in the supply curve combined with a rightward shift in the demand curve will result in which of the following?
2 ∗ (1000/2099)
The market demand for wheat is Q = 100 - 2P + 1Pb + 2Y. If the price of wheat, P is $2, and the price of barley, Pb, is $3, and income, Y is $1000, the income elasticity of wheat is
Normal good
The market demand for wheat is Q = 100 - 2p + 1pb + 2Y. If the price of wheat, P is $2, and the price of barley, Pb, is $3, and income, Y, is $1000. Is wheat a normal or inferior good for this particular consumer and why?
False
according to law of demand, whenprice increases consumers will be demanding more
Elasticity
the percentage change in a variable in response to a given percentage change in another variable.
True
Everything else being constant, if the income of the consumer increases the demand curve will shift to the right
At equalibrium, all products demanded are supplied and all products supplied are demanded, therefore clearing the market
Explain why equalibrium price is also known as market clearing price.
False
In immediate short run the quantity supplied is highly responsive to change in price
horizontal
In the ultimate long run the market supply curve is
True
Income elasticity of demand measures the responsiveness of quantity demanded by a consumer to the change in income of a consumer
.5
Q= 104-40p+20pt+.01Y what would be the income elasticity of demand for avocados if Q = 80 and Y = 4,000?
Normative Economics
"The unemployment rate in the U.S. should be zero percent". This statement is an example of
A. the demand curve is relatively steep than if the demand curve is relatively flat
1) The change in price that results from a leftward shift of the supply curve will be greater if A) the demand curve is relatively steep than if the demand curve is relatively flat. B) the demand curve is relatively flat than if the demand curve is relatively steep. C) the demand curve is horizontal than if the demand curve is vertical. D) the demand curve is horizontal than if the demand curve is downward sloping.
C. They are substitutes
2) Suppose the market demand curve for pizza can be expressed as QD = 100 - 2P + 3Px + 0.8 Y, where QD is the quantity of pizza demanded, P is the price of pizza, Px is the price of a related commodity X, and Y represents consumers' income. What is the relationship between commodity X and pizza, from the point of view of consumers? A) They are independent. B) They are complements. C) They are substitutes. D) Not enough information to answer the question.
A. P=300 Q=400 B. P=350 C. Since cowboy hats are a substitute good, the demand will rise
2. Suppose the United States does not produce any baseball hats domestically but imports them from foreign producers. Initially, demand is and supply (from foreign producers) is Qd= 1000-2p Qs= 100+p a). Determine the equilibrium price and quantity. b). The government then decides that no more than 300 baseball hats should be imported per period and imposes a quota/restriction at that level. How does this quota affect the equilibrium price and quantity? Show the solution using a graph and calculate the numerical answer. c). How might this quota affect the market for cowboy hats (a substitute good)?
B. butter
3) Consider the following products. Which of them has the flattest demand curve? A) insulin B) butter
as a group, consumers are willing and able to pay less for a product
3) If a demand curve shifts left, it implies A) as a group, consumers are willing and able to pay less for the product. B) as a group, consumers are willing and able to pay more for the product. C) government has regulated how many people can purchase the product. D) the profit motive of the firms is making the price too high.
A. W=4 Q=9600 B. Yes, at $5 an hour, there is a supply of 11,500 workers with a demand of only 9,500 leaving a 2,000 worker excess
3. In a competitive labor market, demand for workers is QD = 10,000 - 100W, and supply is QS = 2,000 + 1,900W, where Q is the quantity of workers employed and W is the hourly wage. a). What is the initial equilibrium wage and employment level? b). Suppose that the government decides that $5 per hour is the minimum allowable wage in any market, in this case will there be any excess supply of labor in the market? (Just explain your answer for this one. No calculations needed)
positively sloped or upward sloping
According to the law of supply a supply curve is
perfectly inelastic or 0
Along a vertical demand curve, elasticity is
A. the market quantity demanded at a price of $10 is at least 13 movies per week
Assume the price of a movie is $10. Jenna demands 2 movies per week, Sam demands 3 movies per week, and Jordan demands 8 movies per week. From this information we can conclude that A) the market quantity demanded at a price of $10 is at least 13 movies per week. B) Jordan is obviously more wealthy than either Sam or Jenna. C) Sam is irrational compared to Jenna or Jordan. D) the movie industry is unprofitable
increase in input prices
Ceteris paribus, which of the following can shift the supply curve to the left
D. in both the slope and the intercept of the function
Consider the demand function Qd = 150 - 2P. The effects of other determinants of Qd is reflected in A) the intercept of the function. B) the slope of the function. C) neither the slope nor the intercept of the function. D) in both the slope and the intercept of the function.
0.01
Consider the following equation: Q=104 - 40P - 20Pt + 0.01YWhat is the value of (change in Q/change in Y)?
as a group, consumers are willing and able to pay less for a product
If a demand curve shifts left, it implies
P=40 Q=60
If demand for show tickets is described by the equation QD =100 - p, and supply is QS = 20 + p, find the equilibrium price and quantity.
False
If the cross price elasticity is positive they are compliments.
True
If the cross price elasticity is positive they are substitutes.
D. P=20-.2q
If the demand for oranges is written as Q = 100 - 5p, then the inverse demand function is A) Q = 5p - 100. B) Q = 20 - .2p. C) p = 20 - 5Q. D) p = 20 - .2Q.
.091
If the supply curve for orange juice is estimated to be Q = 40 + 2p, then, at a price of $2, the price elasticity of supply is
False
If the the absolute value of elasticity of demand is equal to 0.3 the demand of the consumer is considered elastic
True
Positive statements are statements of fact, or cause and effect that can be tested by examining the facts.
True
Normative statements are statements or conclusions that involve judgment.
False
Own price elasticity of demand is the % change in the price of the commodity over the % change in quantity demanded
Change in own price of the commodity
Own price elasticity of demand measures the responsiveness or sensitivity of quantity demanded as a result of
True
Steeper the demand curve the more inelastic the demand will be
False
Supply curve plots the relationship between price and income
C. an increase in both price and quantity
Suppose a market were currently at equilibrium. A rightward shift of the demand curve would cause A) an increase in price but a decrease in quantity. B) a decrease in price but an increase in quantity. C) an increase in both price and quantity. D) a decrease in both price and quantity
True
The elasticity of demand is different at every point along a downward-sloping linear demand curve.
C. They are substitutes
Suppose the market demand curve for pizza can be expressed as QD = 100 - 2P + 3Pb, where QD is the quantity of pizza demanded, P is the price of pizza, and Pb is the price of a burrito. What is the relationship between burritos and pizza, from the point of view of consumers? A) They are independent. B) They are complements. C) They are substitutes. D) Not enough information to answer the question.
The supply of corn would decrease, increasing the price of corn
Suppose the price of fertilizer, an input in corn production, were to increase everything else being constant. Which of the following would be expected to occur?
True
The cross price elasticity of demand between two goods will be positive if they are substitutes
the price of a related good y
The cross price elasticity of demand for a good x is the percentage change in the quantity demanded of good x in response to a given percentage change in
Inelastic
The demand curve for necessary goods are most likely to be
depends on how long it takes for consumers and firms to adjust for a particular good
The duration of the short run
Macroeconomics
The economics area that deals with output, employment, incomes, and other activities for the entire economy is known as
Infinite; perfectly elastic
What is the elasticity of a horizontal demand curve?
perfectly inelastic
The price elasticity of supply when the supply curve is Q = 5 is
False
The sign of income elasticity of demand for an inferior good will be positive
negative
The sign of own price elasticity of demand is
Change in own-price
What can cause a movement along the demand curve?