Micro study #2
according to the total revenue test, a price cut increases total revenue if demand is
elastic
because there numerous choices for fast food purchases, the price elasticity of demand for Taco Bell food is likely
elastic
The price elasticity of demand for furniture is estimated at 1.3. This value means one percent increase in the
price of furniture will decrease the quantity of furniture demanded by 1.3
the market demand curve is constructed by adding the
quantities demanded by each individual at each price
the income elasticity of demand is a measure of the responsiveness of the
quantity of a good demanded to changes income
the concept of elasticity of supply measures the responsiveness of the
quantity supplied to a change in the price
a normal good is defined as a good for which the demand curve
shifts rightward as income increases
the income elasticity of demand is defined as the percentage change in
the quantity demanded divided by the percentage change in income
the income elasticity of demand is the percentage change in _____ divided by the percentage change in __________>
the quantity demanded; income
Suppose a rise in the price of peaches from $5.50 to $6.50 per bushel decreases the quantity demanded from 12,500 to 11,500 bushels. The price elasticity of demand is
0.5
Nick can purchase each milkshake for $2. for the first milkshake purchased Nick is willing to pay $4, the second milkshake $3, for the third milkshake $2 and for the fourth milkshake $1. what is the value of Nick's consumer surplus for the milkshakes he buys
$3
jane is willing to pay $50 for a pair of shoes. the actual price of the shoes is $30. Her marginal benefit is
$50
Microsoft raises the price of its office software by 10 percent. as a result, the quantity of personal computers demanded at the current prices decreases by 5 percent. what is the cross elasticity of demand for personal computers with respect to the price of Microsoft office software
-0.5
If the price of a burger decreases by 5 percent and as a result the quantity of burgers demanded increases by 8 percent, the price elasticity of demand equals
1.60
Taco Bell's economists determine that the price elasticity of demand for their tacos is 2.0. So, if Taco Bell raises the price of its tacos by 6.0 percent, the quantity demanded will decrease by ___ percent.
12.0
According to one study, the price elasticity of demand for cigarettes is 0.25. To decrease the consumption of cigarettes by 8 percent, a tax on cigarettes must raise the price of cigarettes by
32 percent
supply is elastic if
a 1 percent change in price leads to a larger percentage change in quantity supplied
The demand for movies is unit elastic if
a 5 percent increase in the price leads to a 5 percent decrease in the quantity demanded
the government sets a price floor for corn which is above the equilibrium price of corn. as a result,_____.
a deadweight loss will be created
to maximize its revenue,
a firm facing inelastic demand should always raise its prices
a market demand curve is constructed by
a horizontal summation of each individual demand curve
in order to have an effect, a price ceiling must be set
below the equilibrium price
a price floor is a price
both answer A and C are correct
Suppose the price elasticity of teenagers' demand for cigarettes is 2.0. If the government imposes a tax on cigarettes that raises the price by 10 percent, how much will it reduce teenaged smoking?
by 20 percent
the market demand curve
can also be the marginal social benefits curve
if the cross elasticity of demand between coffee and tea is positive, an increase in the price of tea will shift the demand curve
coffee rightward
toothpaste and toothbrushes are complements, so the _______ elasticity of demand is_________
cross; negative
donuts and coffee are complements. when the price of a donut increases, the demand for coffee ____ and the cross elasticity of demand for coffee with respect to the price of a is______.
decreases; negative
a minimum wage is a government-imposed price____ that is designed to be _____ the equilibrium wage rate
floor; above
when Sam's annual income was only $15,000, he purchased 50 pounds of bananas a year. When his income rose to $18,000, he purchased 55 pounds a year. Therefore,
for Sam, bananas are normal good
Paul's monthly income decreased from 2,500 to $2,300. As a result, he decreased the number of DVDs he rents per month from 5 to 4. Paul's demand for DVD rentals is
income elastic
About six months ago, Pat lost the job as vice president of a local bank. Since losing the job, Pat still has the sunday newspaper delivered every week. for Pat, the sunday newpaper is
income inelastic
when the demand for a good is inelastic and its price increases, the total revenue from the sale of the good will _____.
increase
Producers' total revenue will increase if
the price rises and demand is inelastic
a rent ceiling below the equilibrium rent will create
increased search time and black markets
If a 20 percent increase in the price of a used car results in a 10 percent decrease in the quantity of used cars demanded, then the demand for used cars is
inelastic
If the price elasticity is between 0 and 1 demand is
inelastic
If the quantity demanded changes by a relatively small amount for a given change in price, then demand is
inelastic
as Mary's income increases by 20 percent, her demand for tickets to National Hockey League games increases by 10 pecent. Mary's demand for tickets is income______; for mary, hockey tickets are ___________ good.
inelastic; a normal
when demand is ______, a decrease in price ______ total revenue.
inelastic; decreases
to say that turnips are inferior goods means that the income elasticity
is negative
sam's demand curve for pizza
is the same as her marginal benefit curve for pizza
The cross elasticity of demand measures the responsiveness of the quantity demanded of a particular good to changes in the prices of
its substitutes and its complements
Demand is price inelastic if a relatively _____ price increase leads to a relatively ______ in the quantity demanded
large; small decrease
the more substitutes available for a product, the
larger is its price elasticity of demand
a price ceiling
makes it illegal to charge a higher price than the specified price
the value of one more unit of a good or services is the
marginal benefit
a person will choose to buy a good as long as
marginal benefits is at least as great as price
If the elasticity of demand for peaches is 1.76 and the elasticity of demand for apples is 1.59, then consumers are
more sensitive to a change in the prices of peaches than they are to a change in the price of apples
at the current level of output, the marginal social cost of tennis balls is greater than the marginal social benefit. Then
more than the efficient quantity of tennis balls is being produced
the amount of time elapsed since a price change impacts the elasticity of demand because as more time passes,
people can find more substitutes, and so the elasticity of demand increases
the marginal cost curve
shows the minimum price sellers must receive to produce a unit of a good or service
if the cross elasticity of demand between goods X and Y is positive and between goods X and Z is negative, then X and Y are ____ and X and Z are_____
substitutes; complements
if a 1 percent decrease in the price of a pound of oranges results in a smaller percentage decrease in the quantity supplied
supply is inelastic
if a rise in the price of orange from $7 to $9 to a bushel increases the quantity of bushels supplied from 4,500 to 5,500 bushels, the
supply of oranges is inelastic
If a 5 percent increase in the price of good A leads to a 4 percent decrease in the demand for good B, then ______.
the goods are complements
marginal cost is
the opportunity cost of producing one more unit
a market is allocatively efficient if
the sum of the consumer surplus and the producer surplus has been maximized
if an increase in price results in no change in total revenue, then demand must be
unit elastic
Consumer surplus is the ____ summed over the quantity bought.
value of a good or service minus the price paid for the good or service