Micro final Exam 1

Decrease in quantity demanded

Results in a movement upward and to the left along a demand curve

If the cross-price elasticity of two goods is positive, then the two goods are..

Substitutes

Elasticity of demand is closely related to the slope of the demand curve. The less responsive buyers are to a change in price, the..

steeper the demand curve will be

Suppose that when the price of a good X falls from $10 to $8, the quantity demanded of good Y rises from 20 units to 25 units. Using the midpoint method, the cross price elasticity of demand is

-1.0, and and Y are complements

If a 25% change in price results in a 40% change is quantity supplies, then the price elasticity of supply is about

1.60, and supply is elastic

When the price of a good is $5, the quantity demanded is 100 units per month; when the price is $7, the quantity demanded is 80 units per month. Using the midpoint method, the price elasticity of demand is about

.67

for which pairs of good is the cross-price elasticity most likely to be negative?

Peanut butter & jelly

If the price elasticity of demand for a good is 5, then a 10% increase in price results in a

50% decrease in the quantity demanded

Likely example of complementary goods for most people would be

Canoes & paddles (something you need both of)

Suppose that demand for a good decreases and, at the same time, supply of the good decreases. What would happen in the market for the good?

Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous

Which of the following can lead to market failure

Externalities but NOT market power

which of the following is like to have the most price elastic demand

Frozen yogurt (something you don't need)

Apple juice is a normal good that is sold in a perfectly competitive market. recently, the price of apple juice has risen and the quantity sold has increased. Which is most likely the explanation for this?

The income of consumers has gone up

which of the following would NOT shift the demand curve for mp3 players

a decrease in the price of mp3 players

The price elasticity of demand measures

buyers' responsiveness to a change in the price of a good

If the quantity demanded of a certain good responds only slightly to a change in the price of the good then the..

demand for good is said to be inelastic

which of the following events must cause equilibrium price to rise?

demand increases and supply decreases

When the price of an ebook is $15.00, the quantity demanded is 400 ebooks per day. when the price falls to $10.00 the demand increases to 700. Given this info using the midpoint method, we know that the demand for ebooks is

elastic

Suppose the cross-price elasticity of demand between peanut butter and jelly is -2.50. This implies that a 20 percent increase in the price of peanut butter will cause the quantity of jelly purchased to

fall by 50 percent

If a good is normal, then an increase in income will result in an ...

increase in the demand for the good

2 goods are complements when a decrease in the price of one good

increases the demand for the other good.

Demand is INelasticif the price elasticity of demand is?

less than 1

for which of the following types of goods would the income elasticity of demand be positive and relatively large

luxuries

assume that a 4 percent increase in income results in a 2 percent increase in the quantity demanded of a good, the income elasticity of demand for the good is

positive, and the good is a normal good

each of the following is a determinant of demand EXCEPT

production technology