ECON 2030 Exam 1

If a 9 percent _____ in price results in a 7 percent increase in the quantity supplied, it can be concluded with certainty that supply is price _____. a. increase; elastic b. increase; inelastic c. decrease; elastic

decrease; inelastic

Suppose Remus decides to go fishing at Lake Pescaccio on his day off from work, but he faces a choice: he can fish the east, south, or west side of the lake. His expected catch for the day is as follows: 3 fish on the east side, 4 fish on the south side, or 5 fish on the west side. Everything else held constant, Remus' benefit of fishing the west side of the lake is _____ fish.

4

Suppose an increase in the price of good X causes the demnad for good Y to decrease, everything else held constant. Therefore the good are ____ and the cross-price elasticity of them is _______

Complements, negative

Suppose you are the rational manager of a nightclub whose revenues have been disapointing recently. At the weekly staff meeting, your nouncer suggests increasing drink prices to increase revenues. Your bartender, however, counters and advises you to decrease drink prices to achieve the same goal. You will take the bartender's advice if you think _______ drinks are

Demand for, elastic

Suppose Christelle, a rational consumer, saw a beautiful Gucci evening bag in silver patent leather that she had a reservation price of $700 for, but she did not buy it. It can be concluded with certanity that the actual price of the evening bag was _______ $700

Greater than

Suppose a biinding price floor is imposed on a market that was in equilibrium when the floor was imposed. It can be concluded with certainty taht the floor will ________ the consumers of the good, everything else held constant.

Hurt

Suppose Spam is an inferior food. Suppose further that national income is decreasing. Everything else held constant, the quilibrium price of spam will

Increase

Suppose that the Gourmet's demand for restaurant meals is price elastic. If the price of a restaurant meal decreases by 6 percent, everything else held constant, the quantity of restaurant meals demnaded by Jeff will _____ by ______ 6 percent

Increase, Greater than

On a production possibilities frontrier (PPF) graph, a specific combination of goods bering produced at a particu lar point in time is said to be ____ if it lies _____ the PPF

Inefficient, inside

The _____ the time period under consideration, everything else held constant, the more price inelastic demand will be for a good. The larger the portion of a consumer's budget good makes up, ewverything lese held constant, the more price ______ demand will be for a good.

Shorter, elastic