micro test 2

Refer to Figure 19.1. Ben's consumer surplus is equal to

$0

In Figure 20.1, total revenue is maximized at the unit price of

$100

Suppose the price of soccer shoes decreases by 7 percent and as a result, there is a 12 percent rise in the quantity of shin guards demanded. The value of the cross-price elasticity of demand is

-1.71

Suppose a university raises its tuition by 6 percent and as a result the enrollment of students decreases by 3 percent. The absolute value of the price elasticity of demand is

0.5

If the price increases by 10 percent, and the quantity demanded falls by 5 percent, the absolute value of the price elasticity will be

0.5.

Suppose the quantity demanded of ski boats falls from 4.0 million to 3.0 million as a result of an average price increase from $20,000 to $25,000 per boat. The absolute value of the price elasticity of demand is closest to

1.29

In Table 19.3, what is the marginal utility of the fifth unit of cola?

12

In Table 19.2, the total utility when two units are consumed is

24

In Table 19.2, the total utility when four units are consumed is

33

In Table 19.3 the marginal utility per dollar of the second cola is

4

The marginal utility per dollar of the third pretzel is

4

Refer to Table 19.1. The marginal utility Josh enjoys from the fourth slice of pizza is

5 utils

Refer to Table 19.1. What is Josh's total utility from consuming the third slice of pizza?

54 utils

In Table 19.2, the marginal utility of the third unit is

6

If the price elasticity of demand is 0.6, then a 10 percent increase in the price of the good will lead to a ________ in the quantity demanded.

6 percent decrease

Suppose computer prices at an office supply store fall from $1,000 to $900 and as a result the quantity demanded of typewriters decreases from 40 to 20 per month. The cross-price elasticity of demand is closest to

6.3

Ceteris paribus, if buyers expect the price of airline tickets to fall in the future, then right now there should be

A decrease in the demand for airline tickets

If bagels and doughnuts are substitutes, then a decrease in the price of doughnuts will result in

A decrease in the demand for bagels

Ceteris paribus, if the subsidies given to corn syrup producers decrease, then we can expect

A decrease in the supply of corn syrup.

To calculate market demand, we

Add the quantities demanded for each individual demand schedule horizontally.

Refer to Table 19.1. For Josh, diminishing marginal utility begins

After the first slice of pizza.

Assume that pencils and pens are substitutes. If the price of pencils rises ceteris paribus, then we will see

An increase in the demand for pens

Peanut butter and jelly are complements. A decrease in the price of one will result in

An increase in the demand for the other

Suppose Caesar allocates his entire budget to the purchase of soft drinks and chips. The marginal utility of the last bottle of soft drink purchased is 12 utils, and each bottle costs $1.20. The marginal utility of the last bag of chips purchased is 8 utils, and each bag costs $1. In order to maximize his utility, Caesar should

Buy more soft drinks and fewer chips since he gets more marginal utility per dollar from soft drinks

Price discrimination works best when

Buyers do not have perfect information about the price

Which panel of Figure 3.3 represents the changes in the market for student housing when university enrollment increases and at the same time the university destroys several older residence halls and apartment buildings?

C

Which of the following is purchased in a product market?

Cell phone service

Airline companies engage in price discrimination by

Charging business customers higher prices than vacation travelers

Sellers can gain profits from price discrimination because

Charging different prices based on willingness to pay can increase revenues without increasing costs.

Assume two goods are substitutes. Ceteris paribus, a decrease in the price of one good will cause the equilibrium price of the other good to

Decrease and the equilibrium quantity of the other good to decrease

A leftward shift of the market demand curve for HDTVs, ceteris paribus, causes equilibrium price to

Decrease and the quantity to decrease

Assume the price elasticity of demand for U.S. Frisbee Co. Frisbees is 0.5. If the company increases the price of each Frisbee from $12 to $16, the number of Frisbees demanded will

Decrease by 14.3 percent.

Assume a series of forest fires reduces the supply of lumber, which is an input in the production of wooden bats. Baseballs and wooden bats are complements. If the price of wooden bats increases, we can expect the

Demand for baseballs to decrease.

Suppose the income elasticity of demand for used jet skis is 3.5. If the level of income decreases by 1 percent, the number of used jet skis sold will, ceteris paribus,

Fall by 3.5 percent.

Assume that store brand cereal is an inferior good. If income rises, then the price of store brand cereal will ________ and the quantity sold of store brand cereal will ________.

Fall;fall

Price elasticity looks at

How much quantity demanded changes after a change in price.

Price discrimination

Is a way for sellers to elicit the maximum willingness to pay from buyers.

Assume Amanda always maximizes her total utility given her budget constraint. Every morning for breakfast she has two eggs and three sausages. If the marginal utility of the last egg is 10 utils and the price of eggs is $1 each, what can we say about the marginal utility of the last sausage if the price of each sausage is $2?

It must be equal to 20 utils.

Sam owns a taco restaurant, and he conducted a consumer survey that indicates that the price elasticity of demand for his restaurant is 3.5. You would advise Sam to

Lower his price to increase revenue.

A consumer maximizes total utility from a given amount of income when the

Marginal utility obtained from the last dollar spent on each good is the same.

People benefit by participating in the market because

Market participation allows individuals to specialize and, with trade, ultimately consume more

The law of diminishing marginal utility suggests that

People are willing to buy additional quantities of a good only if its price falls.

The federal government placed an upper limit on human organ prices, which is called a

Price ceiling.

A ballet performance had many empty seats. This implies that the

Price of the tickets must have been above the equilibrium price.

A rightward shift of the market demand curve for drones, ceteris paribus, causes equilibrium

Price to increase and equilibrium quantity to increase.

In the $80 to $40 price range in Figure 20.1, demand is

Price-inelastic

Total revenue is

Quantity sold times price.

Price elasticity of demand shows how

Responsive the quantity demanded is to a change in price

Rosa is willing to pay $200 for the iPhone, but the actual price is $400. This means

Rosa will not buy an iPhone.

Price discrimination occurs when

Sellers charge two separate prices for the same product to separate consumers.

Car dealers can easily price discriminate because

Sellers negotiate a separate price agreement with each individual buyer.

Suppose a hurricane hits Alabama, causing widespread damage to houses and businesses. The governor of Alabama places price ceilings on all building materials to keep the prices reasonable. Which of the following is the most likely result?

Shortages of building materials and a slower recovery from the storm.

The total consumer surplus is shown on a graph as

The area under the demand curve and above the actual price

Evaluating a supply and a demand curve independently, if the equilibrium price rises

The consumer surplus will fall.

A grocery store put salt on sale but found that total revenues fell. This can be explained by which of the following?

The demand for salt is inelastic.

Which of the following is purchased in a factor market?

The labor of a state university professor

Tickets to a sporting event go on sale and sell out almost instantly. This suggests that

The price for the tickets is below the equilibrium price

If corn and wheat are alternative pursuits for a farmer, a change in the supply of corn will take place when, ceteris paribus

The price of wheat changes

A market is said to be in equilibrium when

The quantity demanded equals the quantity supplied

Assume that steel is used to produce monkey wrenches. Ceteris paribus, if the price of steel rises, then

The supply curve for monkey wrenches will shift to the left

If the actual market price were fixed at $6 per unit in the above diagram

There would be a shortage of 20 units.

In Table 3.1, if government held the price at $3,

There would be a shortage.

The law of diminishing marginal utility gives us a deeper understanding of the downward-sloping demand curve because

When marginal utility is high, we are willing to pay a higher price.

Ceteris paribus, which of the following is most likely to cause a decrease in the supply of skateboards?

an increase in the cost of materials used to produce skateboards

Ceteris paribus, if income increases and as a result, the demand for good X increases and the demand for good Y falls

good X is a normal good and good Y is an inferior good

If Carmen's Coffee Company wants to increase total revenue and the price elasticity of demand is 0.43, the company should

increase in the price of its coffee

Business firms supply goods and services to ________ and purchase factors of production in ________.

product markets; factor markets

Refer to Figure 19.2. With no budget constraint, a rational consumer will consume

six apples