Problem sets 1.1-1.5
An increase in the demand for computers brings a
rise in the price of a computer and an increase in the quantity of computers supplied.
Spam is
an inferior good because as the income available to buy meat decreases, consumers buy more Spam
An economic model _____. An example of a model is _______.
Is simpler than the reality it describes; a roadmap
Which of the following is an example of perfectly elastic demand
Sherry is overwhelmed with buyers of her peaches when she lowers her price by a penny a pound compared to other sellers in the farmers market
example of an income elastic good is
a haircut
If a price cut increases total revenue
demand is elastic
The quantity demanded of a good or service is ________
measured as an amount per unit of time
A supply curve________
tells us the lowest prices at which someone is willing to sell
In the market for chocolate bars, the supply of chocolate bars will increase if ____________
the number of chocolate manufactures increases
Which of the following statements describes a perfectly inelastic demand
Walgreens does not find any changes in the number of people buying chlorthalidone after a 7% rise in its price
If, as Betsy's income decreases, her demand for hamburgers increases, then for Betsy, hamburgers are ___________
an inferior good
A decrease in the supply of ramen noodles brings a
shortage of the ramen noodles at the original price and a rise in their price
A demand curve that illustrates the law of demand______
shows that the quantity demanded increases as the price falls
a hydroelectric dam is an example of __________
capital
P=800-25Qd; P=50+5Qs
800-25Q=50+5Q 750-25Q=5Q 750=30Q Qe=25 800-25(25) 800-625 Pe=175
P=900-20Qd P=600+10Qs
900-20Q=600+10Q 300-20Q=10Q 300=30Q Qe=10 900-20(10) 900-200 Pe=700
If the cross elasticity demand for ski trips with respects to price of a ski jacket is negative, then ski trips and ski jackets are
complements
If, as the prices of a gym membership increases, the quantity of bottled water that people buy decreases, then gym memberships and bottled water are _________
complements
A substitute is a good that is
consumed in the place of another good
In January 2010, the price of gasoline was $2.70 a gallon. By spring 2010, the price had increased to $3.00 a gallon. Assume that there was no changes in average income, population, or any other influence on buying plans. Explain how the rise in the price of gasoline would effect a. the demand for gasoline b. the quantity of gasoline demanded
Given the law of demand you would expect the rise in the price of gasoline to decrease the quantity of gasoline demanded and not change the demand for gasoline
How do the earnings of economics majors compare with other majors? Economics majors earn________
Less than chemical engineering majors and applied mathematics majors but more than most other majors
change in quantity demanded (chicken)
People are buying less chicken because the price of beef has fallen People are buying less chicken because the price of chicken has increased People are buying more chicken because the price of chicken has fallen
Change in demand (chicken)
The cost of chicken feed has increased
Dan says that a 12% increase in the price of a newspaper will decrease the quantity of newspapers demanded by 10%
The demand for newspapers is inelastic
Taking a smartphone to the gym when you work out becomes more popular. What is the result?
The demand for smartphones increases
The price of a music-streaming subscription falls. What is the effect on the price and quantity of smartphones?
The equilibrium quantity of smartphones increases and the equilibrium price rises
You can stay in school or you can quit school and get a full-time job. You have an incentive to stay in school if________
The marginal benefit from staying in school is greater than the marginal cost of staying in school
Why does demand not change when the price of a good changes with no change in the other influences on buying plans? Consider the demand for onions. The demand for onions does not change when a change in ________ occurs
The price of onions
Demand is ________, when all other influences on buying plans remain the same.
The relationship between the quantity demanded of a good and the price of the good
choose the correct statement
Total revenue from the sale of a good equals the price of the good multiplied by the quantity sold
As the price of candy bars increases from 1, to 1.25, to 1.50, William continues to buy candy bars every week
Williams demand for candy bars is perfectly inelastic
If, as Betsy's income increases, her demand for fitness club membership increases, then for Betsy, fitness club membership is
a normal good
A good with an income elasticity greater than one is
a normal good that is income elastic
A good with an income elasticity that is positive and less than 1 is
a normal good that is income inelastic
A good with an income elasticity that is negative is
an inferior good
When the price of tomatoes rises from $3 per pound to $4 per pound, the quantity of tomatoes sold decreases from 15 pounds to 10 pounds. Total revenue _____, and using the total revenue test, we can determine that the demand for tomatoes is _____ .
decreased from 45 to 40 and elastic
An increase in the price of onions __________
decreases the quantity of onions demanded and results in a movement up along the demand curve for onions
If a price cut decreases total revenue
demand is inelastic
if a price cut leaves total revenue unchanged
demand is unit elastic
If the quantity of dental services chemical increases by 15 percent when the price of dental services falls by 10%, is the demand for dental services inelastic, elastic or unit elastic
elastic
The closer the substitute for a good or service, the more
elastic is demand
The greater the proportion of income spent on a good, the more
elastic is demand
The longer the time has elapsed since a price change, the more
elastic is demand
Demand for luxury is more
elastic than a demand for necessity because a luxury has more substitutes
a hairdresser who operates out of her come is an example of___________
entrepreneurship
example of an income inelastic good is
food
A decrease in tuition fees will decrease your college total revenue if the price elasticity of demand for college education is
greater than 0 and less than 1
The law of demand states that other things remaining the same the__________ the price of a good the _________
higher, smaller the quantity demanded
An advance in technology lowers the price of a laptop If the demand for laptops is price inelastic, the quantity of laptops sold will
increase and total revenue will fall
As the average income in China continues to increase, explain how the following will change A.the demand for beef B.the demand for rice
increase if beef is normal good decrease if rice is an inferior good
The shorter the time that has elapsed since a price change, the more
inelastic is demand
The fewer the substitutes for a good or service, the more
inelastic is the demand for it
The smaller the proportion of income spent on a good, the more
inelastic is the demand for it
Webster Dictionaries and Oxford Dictionaries are almost perfect substitutes. The price elasticity of demand for Webster Dictionaries
is almost infinity
Factors of production are grouped into four categories, which are ___________
land, labor, capital, and entrepreneurship
Ski trips and ski jackets are compliments The cross elasticity of demand for ski trips with respect to the price of a ski jacket is
negative
The income elasticity of demand for Spam is
negative because as income falls, the quantity of Spam demanded increases
The quantity demanded of a good or service is______________
not necessarily the same as the quantity actually bought
The price elasticity of demand is calculated by dividing the
percentage change in the quantity demanded by the percentage change in price
A complement is a good that is
produced with another good
A demand curve shows the relation between the _______ and _______ when all other influences on buying plans remain the same
quantity demanded of a good; its price
The supply curve shows the relationship between:
quantity supplied of a good and price
Economics is the _______ the choices that individuals, business, governments, and entire societies make as they______, and the influences on those choices the arrangements that coordinate them.
social science that studies; cope with scarcity
If the cross elasticity of demand for pasta with respect to the price of pizza is positive, then pasta and pizza are
substitutes
If, as the price of a meal at Taco Bell decreases, the quantity of meals at Pizza Hut that people buy decreases, then meals at Taco Bell and meals at Pizza Hut are ____________
substitutes
Taking a smartphone to the gym when you work out become less popular. What is the result?
the demand for smartphones decreases
The expected prices of a smartphone next year falls. What is the result
the demand for smartphones today decreases
The expected price of a smartphone next year rises. What is the result?
the demand for smartphones today increases
The price elasticity of demand is a units-free measure of the responsiveness of_______
the quantity demanded of a good to a change in its price when all other influences on buying plans remain the same
If the price of a granola bar falls, with all other influences on buying plans remaining the same, in the market for granola bars ________
the quantity of granola bars demanded increases
If the price of a smartphone rises, with all other influences on buying plans remaining the same, in the market for smartphones ________
the quantity of smartphones demanded decreases
If the price of sunscreen falls, with all other influences remaining the same, in the market for sunscreen _____________
the quantity of sunscreen demanded increases
Supply is ________ when all other influences on buying plans remain the same
the relationship between the quantity supplied of a good and the price of a good
By remaining in school, you are paying an opportunity cost that includes ____________
the wages you could earn if you took a job
By remaining in school, you are paying an opportunity cost that includes
time you could have been playing soccer instead of studying
