ECON 2201

The inverse demand curve for M&B chardonnay (wine) is P = 200 − 0.1QD. The quantity demanded at which demand is unit elastic is:

1,000

A company produces a flying car; however, it is so expensive that no one is willing to buy it. The price they are charging is:

a price greater than or equal to the demand choke price.

The Beartown grocery store has been out of stock of a popular brand of chocolate since the manufacturer lowered the price. This is an example of _____.

a shortage

A shoe company decreases their prices after finding a way to make production less expensive. If nothing else changes, this will cause a(n) _____ in _____.

an increase; quantity demanded

The main reason economists use the price elasticity of demand instead of the slope of the demand curve is that the slope _____ when the units of measurement (price and quantity) change, but the price elasticity of demand does not change when the units change.

changes

Increased interest in running causes an increase in the purchase of running shoes. Many of those buying running shoes also buy socks and running shorts. The socks and running shorts are _____ to the running shoes.

complements

Increasing temperatures lead to an increase in the consumption of water and soda. Many of those purchasing water and soda also buy plastic cups with the drinks. The plastic cups are _____ to the drinks.

complements

A tomato farmer switched to a cheaper fertilizer. This change to his _____ may result in a lower selling price.

cost of production

In Tinyburg, a town with 1000 inhabitants, most residents work for a car manufacturing company in one capacity or another. Increased automation causes the company to cut 100 jobs. This results in a(n) _____ in the average income, which is likely to cause a(n) _____ in demand/the consumption of normal goods.

decrease; decrease

Apples and Opals Boutique has stocked a large number of feather fans. Very few of the fans sell. This is an example of:

excess supply

A luxury good is a good:

for which consumption rises faster than income rises.

The price of technology (computers, cell phones, etc.) has fallen drastically over the last two decades. As a result, there has been a(n):

increase in quantity demanded

Rivka lost her job as an executive assistant and was forced to take a job at a grocery store at a lower wage. As a result, Rivka will likely buy more:

inferior goods

If the equation of a supply curve is Q = 20P − 500, then the equation of the inverse supply curve is:

p=0.05q+25

The equation ED = %ΔQD/%ΔP describes the:

price elasticity of demand

A decrease in the price of a good, holding everything else constant, causes an increase in _____.

quantity demanded

Maggie put ads in the newspaper and paid for advertisements on social media. These are examples of:

search cost

The main reason economists use price elasticity of demand instead of the slope of the demand curve is that:

slope changes when the units of measurement (price and quantity) change, but price elasticity of demand does not change when the units change.

A store sells three different brands of paper towels. This is an example of:

substitutes

Two exercise centers are opened on the same block. Fierce competition ensues, and membership prices are very competitive. Membership at these exercise centers is an example of:

substitutes

Two exercise centers are opened on the same block. Fierce competition ensues, and membership prices are very competitive. Membership at these exercise centers is an example of:

subtitutes

To economists, production technology is:

the processes used to grow, distribute, and sell a good