microeconomics exam 1
If Francis receives a decrease in his pay, we would expect Francis's demand for each good he purchases to remain unchanged.
false
If a 15 percent increase in price causes a 30 percent decrease in quantity demanded, this product might have no close substitute.
false
If a 30 percent change in price causes a 15 percent change in quantity supplied, then the price elasticity of supply is 1/2 and supply is elastic.
false
If a good is "normal", then an increase in income will result in no change in the demand for the good.
false
If buyers now wanted to purchase larger quantities of Vanilla Coke, the demand curve for Vanilla Coke would shift to the left.
false
If sellers do not respond at all to a change in price, technological advancement must be great
false
If the elasticity of supply is zero, then supply is very elastic.
false
If the elasticity of supply of a product is 2.5, we know that supply is inelastic.
false
If the government wanted to enact a policy to increase living standards in the country, it might allow corporate tax write-offs for money spent on worker safety.
false
If the price elasticity of demand for a good is 4.0, then a 10 percent increase in price would result in a 4.0 percent decrease in the quantity demanded.
false
If the price of a substitute to good X increases, then the demand for good X will decrease
false
If the quantity supplied is the same regardless of price, then the supply curve would be elastic.
false
If the quantity supplied responds only slightly to changes in price, then supply is said to be elastic.
false
In a free market, suppliers determine how much of a good will be sold and the price at which it is sold.
false
In economics, the cost of something is the dollar amount of obtaining it.
false
In general, elasticity is the friction that develops between buyers and sellers in a market.
false
In most societies, resources are allocated by a single central planner.
false
Mallory decides to spend 3 hours working overtime rather than watching a video with her friends. She earns $8 an hour. Her opportunity cost of working is the $24 she earns working.
false
People make decisions at the margin by following tradition
false
Prices direct economic activity in a market economy by reducing scarcity of the goods and services produced.
false
Scarcity exists when there is less than an infinite amount of a resource or good.
false
Suppose your management professor has been offered a corporate job with a 30% pay increase. He has decided to take the job. For him, the marginal cost of leaving was greater than the marginal benefit.
false
The "invisible hand" directs economic activity through advertising.
false
The elasticity of a perfectly elastic supply curve equals 0.
false
The forces that make market economies work are price and quantity.
false
The greater the price elasticity of demand the more likely the product is a necessity
false
The price elasticity of supply measures how much the quantity supplied responds to changes in input prices
false
The price where quantity supplied equals quantity demanded is called the coordinating price.
false
The sum of all individual demand curves for a product is called total demand.
false
The unique point at which the supply and demand curves intersect is called market unity.
false
When quantity demanded responds only slightly to changes in price, demand is said to be unit elastic
false
When referring to the variables price and quantity demanded, price and quantity demanded are independent of each other.
false
When there is a shortage in a market, there is downward pressure on price.
false
When we move up or down a given demand curve, only price is held constant.
false
You love peanut butter. You hear on the news that 50 % of the peanut crop in the South has been wiped out, which will cause the price to double by the end of the year. As a result, your demand for peanut butter will increase by the end of the year.
false
A change in the price of the good or service would not shift the demand curve for a good or service.
true
A decrease in resource costs to firms in a market will result in a decrease in equilibrium price and an increase in equilibrium quantity.
true
A decrease in supply will cause the largest increase in price when both supply and demand are inelastic.
true
A demand curve is the downward-sloping line relating the price of the good to the quantity demanded.
true
A market is a group of demanders and suppliers of a particular good or service.
true
Alice says that she would buy one banana split a day regardless of the price. If she is telling the truth, Alice's demand for banana splits is perfectly inelastic
true
An example of a firm with market power is a cable TV provider in St. Louis
true
An example of an externality is the impact of pollution from a factory on the health of people in the vicinity of the factory.
true
As elasticity rises, the supply curve gets flatter.
true
As the elasticity of supply approaches infinity, very small changes in price will lead to very large changes in quantity supplied.
true
Both The Wealth of Nations and the Declaration of Independence share the point of view that individuals are best left to their own devices without the government guiding their actions.
true
Causes of market failure include externalities and market power.
true
Concerning a vertical supply curve, suppliers will not respond to a change in price.
true
Demand for a good would tend to be more inelastic the fewer the available substitutes.
true
Demand is inelastic if elasticity is less than 1.
true
Demand is said to be unit elastic if quantity demanded changes by the same percent as the price.
true
Economics is the study of how society manages its scarce resources.
true
Economists in general do not try to explain people's tastes, but do try to explain what happens when tastes change.
true
Efficiency refers to the size of the economic pie; equity refers to how the pie is divided
true
For most students, the largest single cost of a college education is the wages given up to attend school.
true
Funsters, Inc., the largest toy company in the country, sells its most popular doll for $15. It has just learned that its leading competitor Toysorama is mass producing an excellent copy and plans to flood the market with their $5 doll in 6 weeks. Funsters should increase the supply of their doll now before the other doll hits the market.
true
If a surplus exists in a market we know that the actual price is above equilibrium price and quantity supplied is greater than quantity demanded.
true
If buyers and / or sellers are price takers, then individually they have no influence on market price
true
If two supply curves pass through the same point and one is steep and the other is flat, the steeper supply curve is more inelastic.
true
In a market, to find the total amount supplied at a particular price, we must add up all of the amounts firms are willing and able to supply at that price.
true
New oak tables are normal goods. What would happen to the equilibrium price and quantity in the market for oak tables if the price of maple tables rises, the price of oak wood rises, more buyers enter the market for oak tables and the price of wood saws increased? Price will rise and the effect on quantity is ambiguous.
true
Russell spends an hour studying instead of playing tennis. The opportunity cost to him of studying is the enjoyment and exercise he would have received had he played tennis.
true
Similar products, numerous sellers, and numerous buyers are all characteristics of a perfectly competitive market.
true
Suppose that demand decreases AND supply decreases. We would expect equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.
true
Suppose that the incomes of buyers in a particular market for a normal good decline and there is also a reduction in input prices. In this market, we would expect the equilibrium price would decrease, but the impact on the amount sold in the market would be ambiguous
true
Suppose that the number of buyers in a market increases and a technological advancement occurs also. In this market, we would expect equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous
true
Suppose you like banana cream pie made with vanilla pudding. Assuming all other things are constant, you notice that the price of bananas is higher. Your demand for vanilla pudding would decrease.
true
The difference between slope and elasticity is that slope measures actual changes and elasticity measures percentage changes.
true
The income of a typical worker in a country is most closely linked to productivity.
true
The main determinant of the price elasticity of supply is time
true
The market supply curve shows the total quantity supplied at any price.
true
The opportunity cost of going to college is the value of the best opportunity a student gives up to attend college.
true
The price elasticity of demand measures a buyer's responsiveness to a change in the price of a good.
true
Those who buy the product or service ultimately determine the demand for a product of or service
true
Two goods are substitutes if a decrease in the price of one good increases the demand for the other good
true
What will happen to the equilibrium price and quantity of new cars if the price of gasoline rises, the price of steel rises, public transportation becomes cheaper and more comfortable, and auto-workers negotiate higher wages? Quantity will fall and the effect on price is ambiguous
true
When a supply curve is relatively flat, the supply is relatively elastic
true
When the government redistributes income from the rich to the poor, people work less and produce fewer goods and services.
true
Economists use the phrase "There is no such thing as a free lunch," to illustrate how inflation increases prices
false
Elasticity of demand is closely related to the slope of the demand curve. The more responsive buyers are to a change in price, the demand curve will be steeper.
false
For a horizontal demand curve, slope is undefined and elasticity equals 0.
false
For economists, people's tastes and demand are beyond the realm of economics.
false
Henry decides to spend two hours playing golf rather than working at his job which pays $8 per hour. Henry's tradeoff is nothing, because he enjoys playing golf more than working.
false
A country with an aging population will generally experience no change in either market demand or individual demand for prescription drugs.
false
A demand curve illustrates the tradeoff between inflation and unemployment.
false
A good will have a more inelastic demand the greater the availability of close substitutes
false
A primary function of prices in a market economy is to provide participants with spending limits.
false
A rational decision maker takes an action only if the marginal benefit is less than the marginal cost.
false
A supply curve slopes upward because as more is produced, total cost of production falls.
false
A table that shows the relationship between the price of a good and the quantity demanded is called a demand table.
false
A very hot summer in Atlanta will cause the demand for lemonade to shift to the left.
false
According to the law of demand price and quantity supplied are inversely related
false
After much consideration, you have chosen Cancun over Ft. Lauderdale for your Spring Break trip this year. For this decision to change, the marginal benefit of Cancun must increase
false
An advance in production technology will increase a firm's costs
false
An economy's scarce resources are allocated by economic planners.
false
An example of market power is a fast food restaurant in a college town.
false
An externality is the impact of a person's actions on that person's well-being.
false
An increase in the number of scholarships issued for college education would increase the supply of education.
false
Approximately 75 percentage of the world's economies experience scarcity
false
Chocolate Chip Cookie Dough ice cream would tend to have very elastic demand because it must be eaten quickly.
false
Demand is elastic if elasticity is less than 1.
false
Demand is said to be elastic if the price of the good responds substantially to changes in demand
false
Demand is unit elastic if elasticity is less than 1.
false
