Micro quiz questions

If a consumer is willing to pay $20 for a particular good and if he pays $16 for the good, then for that consumer, consumer surplus amounts to

$4

Suppose X has a positive income inelasticity of demand. This implies that good X could be (i)a normal good (ii) a necessity (iii)an inferior good (iv) a luxury

(i), (ii), and (iv) only.

Tyler purchases 5 pounds of hotdogs per month when his monthly income is $2,000 and 4 pounds of hot dogs per month when his monthly income is $2,200. Tyler's income elasticity of demand for hot dogs is

-2.33, hot dogs are an inferior good

If the price elasticity of supply is 1.5, and a price increase led to a 1.8% increase in quantity supplied, then the price increase is about...?

1.20%

Suppose that Amanda receives a pay increase. We would expect

Amanda's demand for inferior goods to decrease

Producer surplus is the

amount a seller is paid minus the cost of production

The area below a demand curve and above the price measures

consumer surplus

The line that relates the price of a good and the quantity demanded of that good is called the demand

curve, it usually slopes downward

Equilibrium quantity must decrease when demand

decreases and supply does not change, when demand does not change and supply decreases, and when both demand and supply decrease.

Which would cause equilibrium price to rise?

demand increases and supply decreases

Moving production to a high-cost producer to a low-cost producer will

raise total surplus

what would an adoption to new technology do to a supply curve?

shift to the right

Denise values a stainless steel dishwasher for her new house at $500, but she succeeds in buying one for $350. Denise's consumer surplus is

$150

"Other things equal, when the price of a good rises, the quantity demanded of the good falls, and when the price falls, the quantity demanded rises" this relationship between price and quantity demanded

-applies to most goods in the economy -is represented by a downward-sloping demand curve -is referred to as the law of demand

A seller's willingness to sell is

-measured by the seller's cost of production -related to the supply curve, just as buyer's willingness to buy is related to demand curve -less than the price received if producer surplus is a positive number

Five hundred units of good x are currently bought and sold. The marginal buyer is willing to pay $40 for the 500th unit, and the cost to the marginal seller is $35 for the 500th unit. We know that

-the equilibrium price of good X is somewhere between $35 and $40 -the equilibrium quantity of good X exceeds 500 units -500 units is not an efficient quantity of good X`

Suppose the price elasticity of supply for minivans is 0.3 in the short run and 1.2 in the long run. If an increase in the demand for minivans causes the price of minivans to increase by 5%, then the quantity supplied of minivans will increase by about?

1.5% in the short run and 6% in the long run

Total surplus in a market is equal to

value to buyers minus cost of sellers

The supply curve for milk

Does not shift when the price of milk changed because the price of milk is measured on the vertical axis of the graph

Demand is elastic if the price elasticity of demand is

Greater than 1

ABC Company incurs a cost of 50 cents to produce a dozen eggs, while XYZ Company incurs a cost of 70 cents to produce a dozen eggs. Which of the following price increases would cause both companies to experience an increase in producer surplus?

The price of a dozen eggs increases from 55 cents to 75 cents

if the price elasticity of demand for a good is 6, then a 3% decrease in price results in

an 18% increase in the quantity demanded

What would happen to the equilibrium price of and quantity of lattes if consumers' incomes rise and lattes are a normal good?

both the equilibrium price and quantity would increase

Holding all other things constant, a higher price for ski lift tickets would

decrease the # of skis sold

Holding all other factors constant by using the midpoint method, if a candy manufacturer increases production by 20% when the market price of candy increases from $0.50 to $0.60 then supply is,

elastic, since the price elasticity of supply is 1.1

Other things equal, the demand for a good tends to be more inelastic, the...

fewer available substitutes

A movement upward and to the right along a supply curve is called a(n)

increase in quantity supplied

If an increase in income decreases the demand for a good, then the good is a(n)

inferior good

While in college, John and Bethany each buy 5 packs of mac-n-cheese a week. After they graduate and have full-time jobs, John buys 6 packages of mac-n-cheese per week, but Bethany only buys two packages per week. When looking at income inelasticity of demand for mac-n-cheese, John's

is positive, and Bethany's is negative

Inefficiency exists in an economy when a good is

not being consumed by buyers who value it most highly

The quantity supplied of a good is the amount that

sellers are willing and able to sell

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