homework for econ exam 1
When the price of a skateboard increases by 4 percent, the quantity of elbow pads demanded decreases by 2 percent. Calculate the cross elasticity of demand for elbow pads with respect to the price of a skateboard.
-.50 --> they are complements
Dairies make low-fat milk from full-cream milk, and in the process they produce cream, which is made into ice cream. Explain the effect of the following events on the supply of low-fat milk. 1) If the wage rate of dairy workers rises, the supply of low-fat milk _______. 2) If the price of cream rises, the supply of low fat milk ___ 3) If the price of low-fat milk rises, the supply of low-fat milk, _____ (asking about supply not quantity supplied)
1) Decreases because the cost of producing low-fat milk increases 2) Increases because cream and low-fat milk are complements in production 3) does not change because the relationship between price and quantity supplied does not change
If the quantity demanded of pizza increases by 20 percent when the price of pizza falls by 2 percent, what is the price elasticity of demand for pizza?
10
When income increases by 5 percent and all prices remain the same, the quantity of smartphones demanded increases by 10 percent. Calculate the income elasticity of demand of smartphones.
2
Suppose that the price of a cashmere sweater is $100 and Jean's marginal benefit from a cashmere sweater is $300. If Jean buys 1 cashmere sweater, what is her consumer surplus?
200
(Figure 1) If the price of a denim jacket falls from $80 to $40, while all other influences on buying plans are unchanged, the quantity of denim jackets demanded changes from __ to __
4 mil, 12 mil
Suppose that the price of a cashmere sweater is $250 and Jean's marginal cost of producing a cashmere sweater is $175. What is Jean's producer surplus? Jean's producer surplus is
75
which of the following statements describes the big tradeoff Sharing the pie more equally _____ . A. makes it bigger. B. makes it smaller. Your answer is correct.C. is the right thing to do regardless of the size of the pie. D. has no influence on its size.
B
All of the following are incentives for you to take a class in summer school except ______. A. your failure in the winter does not allow you to continue your education until you earn a credit for this course B. the course fits more easily into your summer schedule than your fall schedule C. the smaller class size in the summer, which makes it easier to get help from the professor D. you prefer summer outdoor activities to winter outdoor activities
D
The demand for plums is unit elastic if _____. A. my demand for plums increases when the price of apples falls B. any increase in the price of plums results in a 1 percent decrease in the quantity of plums demanded C. the price of plums does not change after a drought D. a 5 percent rise in the price of plums results in a 5 percent decrease in the quantity of plums demanded
D
Which of the following statements is a normative macroeconomic statement? A. A decrease in cigarette taxes will encourage more people to smoke. B. More generous unemployment benefits will increase the unemployment rate. C. State governments should lower taxes on cigarettes. D. The U.S. government should increase unemployment benefits.
D
Which of the following statements is a positive microeconomic statement? A. Lower taxes might increase employment. B. Apple should lower the price of its iPad to discourage competitors from entering the market. C. Interest rates will rise as the economy expands. D. The price of an iPad will fall over the next year.
D
Rain spoils the strawberry crop, the price of strawberries rises from $6 to $8 a box, and the quantity demanded decreases from 600 to 200 boxes a week. Over this price rang, the demand for strawberries is (inelastic, elastic, or unit elastic)
Elastic
If a price of a sundae falls, a ____ the demand curve occurs. If any factor that influences buying plans other than the price changes, then a ___ the demand curve occurs.
Movement down along; shift of
Which of the following statements is an example of transaction costs?
I paid a commission to the real estate broker when i bought my house
(Figure 1) If the price of a denim jacket falls from $80 to $40, all other influences are unchanged, the quantity of denim jackets demanded
Increases
If the quantity of dental services demanded increases by 5 percent when the price of dental services falls by 10 percent, is the demand for dental services inelastic, elastic, or unit elastic?
Inelastic
The smaller the proportion of income spent on a good, the more _____ is the demand for it
Inelastic
(Figure 1) The change in the price of a denim jacket illustrates what law in action
Law of Demand
A competitive market is a market that has ___, so ___ can influence the price.
Many buyers and sellers; no single buyer or seller
When a shortage arises, the price ______ to its equilibrium, which _______.
Rises; decreases the quantity demanded and increases the quantity supplied
When an event occurs that changes the demand for coffee makers, ___ if demand increases and ____ if demand decreases
The demand curve shifts rightward; the demand curve shifts leftward
The creation of a successful movie illustrates choices made in self-interest that also achieve the social interest if ______.
The movie is produced at the lowest possible cost, and the movie gives the greatest possible benefit.
The demand for gym memberships does not change when a change in ___ occurs. a. the price of a gym membership b. the average income c. the price of bottled water (complement of a gym membership) d. the expected future price of a gym membership
The price of a gym membership
The price elasticity of demand is a units-free measure of the responsiveness of ________
The quantity demanded of a good to a change in its price when all other influences on buying plans remain the same
Demand is ____, when all other influences on buying plans remain the same.
The relationship between the quantity demanded of a good and the price of the good.
When Kanye West gave away tickets, what was free and what was scarce? Kanye West Offers Free Concert Tickets Kanye West has teamed with Los Angeles inner-city schools to offer free passes for students.
The seats available for the concert are scarce because there are only a certain number available.
If, as Johnny's income increases, his demand for Perrier water increases, then for Johnny, Perrier water is ____
a normal good
A good with an income elasticity greater than one is ______. A good with an income elasticity that is positive and less than 1 is ______.
a normal good that is income elastic; a normal good that is income inelastic
a good with an income elasticity that is negative is
an inferior good
If the cross elasticity of demand for golf clubs with respect to the price of a golf lesson is negative, then golf clubs and golf lessons are ______.
complements
When the price of tomatoes rises from $3 per pound to $4 per pound, the quantity of tomatoes sold decreases from 15 pounds to 10 pounds. Total revenue _____, and using the total revenue test, we can determine that the demand for tomatoes is _____ .
decreases from 45 to 40; elastic
An increase in the price of a gym membership
decreases the quantity of gym memberships demanded and results in a movement up along the demand curve for a gym membership
Market failure is a situation in which the market
delivers an inefficient outcome
This process of economic growth _______.
does not eliminate scarcity because we still must give up production of one good to increase production of a second good and remain on the new production possibilities frontier
The big tradeoff is the tradeoff between
efficiency and fairness
If a price cut increases total revenue, demand is ______. If a price cut decreases total revenue, demand is ______.
elastic; inelastic
producer surplus is the
excess of the amount received from the sale of a good over the cost of producing it
When a surplus arises, the price ______ to its equilibrium, which _______.
falls; increases the quantity demanded and decreases the quantity supplied
What is the relationship between individual supply and market supply? The market supply curve is the ______ sum of the individual supply curves. It is formed by adding ______.
horizontal; the quantities supplied by all the producers at each price
An increase in the price of lawn fertilizer, a substitute in production of bug spray, will ______ the equilibrium price of bug spray and ______ the equilibrium quantity of bug spray.
increase; decrease
Before starring in Guardians of the Galaxy, Chris Pratt had appeared in 11 movies that grossed an average of $7 million on the opening weekend. Guardians of the Galaxy grossed $94 million. The success of Guardians of the Galaxy ______ the opportunity cost of hiring Chris Pratt. Movie producers now have ______ incentive to hire Chris Pratt.
increases; more
The fewer the substitutes for a good or service, the more ______ is the demand for it
inelastic
The supply of apples in the short run will be ______ than the supply in the long run and ______ than the momentary supply today.
less elastic; more elastic
When Apple Inc. expands and rents an adjacent building, the flows are a ______ from firms to households and a ______ from households to firms.
money flow; real flow
Consumer surplus is the ____ of a good in excess of ____, summed over the quantity bought
marginal benefit of a good in excess of the price paid for it
The market is efficient if total surplus is
maximum
When you buy a new e book from Amazon, the flows are a ______ from households to firms and a ______ from firms to households.
money flow; real flow
If the price of a taco rises, a ______ the supply curve occurs. If any factor that influences selling plans other than the price changes, then a ______ the supply curve occurs.
movement up along; shift of
symmetry principle
people in similar situations should be treated similarly
The price elasticity of demand is calculated by dividing the _____ by the _____
percentage change in the quantity demanded; percentage change in the price
William loves candy bars. As the price of a candy bar increases from $1.00 to $1.25 to $1.50, William continues to buy a dozen candy bars every week. William's demand for candy bars is _______.
perfectly inelastic
The cross elasticity of demand is a measure of the responsiveness of the demand for a good to a change in the ______, other things remaining the same.
price of a substitute or compelement
producer surplus is calculated as the _____ a good minus ____, summed over the quantity sold
price received for; its marginal cost
If the cross elasticity of demand for ramen noodles with respect to the price of rice is positive, then ramen noodles and rice are ______.
substitutes
A decrease in the demand for ramen noodles together with an increase in the supply of ramen noodles brings a ______ of ramen noodles at the original price and a ______ in their price.
surplus; fall
The obstacles to achieving an efficient allocation of resources in the market economy include ____
taxes and subsidies, externalities, monopoly, and public goods
What is the opportunity cost of creating the technology for trips around the moon? The opportunity cost of creating the technology for trips around the moon is _______.
the decrease in the current production of other goods and services
All ideas about fairness can be divided into two broad groups: It's not fair if ______, and it's not fair if ______.
the result isnt fair; the rules arent fair
Deadweight loss is the decrease in ____ that results from an inefficient ____ or _____
total surplus; underproduction; overproduction
Taxes lead to ___ and subsidies lead to
underproduction; overproduction
Price regulations that put a cap on the rent a landlord is permitted to charge lead to ____ A monopoly leads to ____
underproduction; underproduction
if a price cut leaves total revenue unchanged, demand is
unit elastic
Utilitarianism
we should strive to achieve the greatest happiness for the greatest number
Amazon Delays Opening of Cashier-Less Store to Work Out Kinks Amazon.com Inc. is delaying the public opening of its first cashier-less convenience store because of technical complications. Amazon Go was due to launch to the public by the end of the month, ... It is unclear when it will now open, as it works out kinks in the technology to automatically charge customers when they leave, instead of needing to have cash registers, checkouts and lines. The store in Amazon's hometown of Seattle uses cameras, sensors and algorithms to watch customers and track what they pick up, ... But Amazon has run into problems tracking more than about 20 people in the store at one time, ... The store will continue to need employees to help ensure the technology is accurately tracking purchases for the near future. ... The news clip deals with the ______ questions The news clip implies a tradeoff between _____
what and how using traditional check-out methods and using cashier-less technology