Test 1 Pre

What variable does not shift demand

Price of raw materials

total revenue

Price x Quantity

A change in which factor would shift the supply curve?

Production Technology

Which of the following might explain why the price of DVD players has been falling?

a decrease in the price of high-definition Blu-ray players

If Major League Baseball ticket prices rise by 15%, the number of tickets sold falls by 5%. The elasticity of demand is:

-1/3

Demand slopes down because

. consumers will choose to use goods only in their most valuable uses when prices are high.

The key to using the cost-benefit principle is to think about _____ aspects of a decision.

Both Financial and non Financial

The marginal principle breaks quantity decisions into iterative decisions that use the

Cost benefit principle

Demand shift to the right means

Demand increases

A decrease in the price of a good will typically increase demand for that good.

False

Marge tutors English students. If she raises rates, her revenues increase. Brad tutors biology students. If he lowers rates, his revenues increase. Which of the following is TRUE?

Marge's demand is inelastic, and Brad's demand is elastic.

Sunk costs should ____ be considered as part of the opportunity costs of a decision.

Never

When supply decreases there is a ______ at the old equilibrium price, which puts ______ pressure on price until the market reaches the new equilibrium.

Shoortage; Upward

A market can be described by the equations Qd = 50 - 3P and Qs = 2P. What are the equilibrium price and quantity in this market?

The equilibrium price is $10, and the equilibrium quantity is 20 units.

In free markets shortages lead to

higher prices

Suppose that the equilibrium price in the market is $10. If the current market price is $7.50

competition among buyers will increase the current price.

The quantity demanded of a good of service is the amount that:

consumers are willing and able to buy at a given price.

If demand is elastic, a price ________ causes ________ in total revenue

decrease; increase

In the early 1980s, movie rentals averaged $5 a night; by the early 1990s, that average was $1 per night. This is an example of a supply curve shifter based on:

entry of new suppliers into the market

In a free market setting where quantity supplied is 50 units and quantity demanded is 40 units, price will:

fall

Necessities are elastic or inelastic?

inelastic

The demand for most goods tends to become ______ over time. Select one:

more elastic

The law of demand suggests a _____ relationship between price and _____.

negative; quantity demanded

Which of the following factors causes a decrease in supply?

new taxes on output

Asking or What

opportunity cost

In a market, the equilibrium condition is given by the following:

quantity demanded = quantity supplied

Sunk Costs are cost that are incurred

regardless of which decision is made

The price elasticity of demand:

tells us how responsive consumer purchases are to price changes

the more horizontal the demand curve

the more elastic the good is

The demand curve for Froot Loops breakfast cereal is very elastic because

there are many good substitutes for Froot Loops.