chp 4-6
The aforementioned examples are goods that are likely to be _______ You would expect the value of the cross-price elasticity to be _______, because the opportunity cost of getting information on price is low.
substitute; large
If the price of a good falls and this causes the quantity demanded of another good to fall, then the items are considered to be ______ and the cross-price elasticity is ________
substitues; positive
if increasing the price of solar panals by 20% leads to a decrease in the quantity demanded by 10%, what is the absolute value of the price elasticity of demand for solar panels?
0.5
When the government increased the minimum wage by 50%, it led to a 75% increase in workers providing labor. Based on the information given, what is the price elasticity of supply for labor?
1.50
On weeknights an Uber driver can expect to earn $110 driving a six-hour shift. Surge pricing on Saturday nights mean that Uber drivers can expect to earn $140 driving a six-hour shift. On weeknights, there are 200 drivers on the road, which rises to 300 on Saturdays. Calculate the price elasticity of supply of Uber drivers using the midpoint formula.
1.67
if increasing the price of tables by 10% leads to a decrease in the quantity demanded by 20%, what is the absolute value of the price of elasticity of demand for tables?
2.0
You purchased a ticket to the musical Hamilton through a verified reseller for $457.00. When your ticket arrives, you see that the face value printed on it is $259.00.
The face value is below the equilibrium price because the rate in the secondary market exceeds the face value.
The opposite of a price ceiling is _____, which sets a _____ price that can be charged.
a price floor; minimum
for elasticity the ____ the number in absolute value, the more elastic the good is, which means it's _____ to the change
bigger; more responsive
the more ____ there are, the more likely you are to find a _____
competing products, close substitute
If the price of a good falls and this causes the quantity demanded of another good to increase, then the items are considered to be _____ and the cross-price elasticity is________
compliments; negative
if the price for eggs were to rise by 15%, and if the price elasticity of demand for eggs is around -0.2, will the quantity demanded for eggs increase or decrease, and by what percent?
decrease by 3%
taxes on buyers ___ demand to reflect the new lower marginal benefit, shifting the demand curve to the _____
decrease; left
price ceilings on prescription drugs in canada result in
fewer new drugs being available in canada
as a manager you want to use the price elasticity of demand for your product to:
forecast the likely consequences of any change in price
When the government imposes a binding price floor, some sellers won't find anyone to buy their product. This may mean that some try to _____ on the black market at prices _____ the price floor.
illegally sell; below
quantity regulations for ____ effectively limit the supply of workers
immigration quotas
Extra capacity gives business the flexibility to respond to higher prices, but once the business uses its maximum available capacity, it won't be able to _____. At that point, its price elasticity of supply will become _______
increase production; inelastic
Microchips used in smartphones become less costly to produce. As a result, the supply of smartphones _____, causing the equilibrium price to _______ and the equilibrium quantity to_______
increases, fall, rise
when a tax on sellers increases by $0.05s, the quantity of gas sold will be ____, and the seller will receive a ___ price after tax
lower; lower
a binding price floor sets a price that is the ____ price that sellers can charge and is ___ the equilibrium price
lowest; above
when the government imposes a tax on you as a seller, your ______ or producing each unit ______ by the amount. of the tax
marginal cost; goes up
if you rearrange the formula for price elasticity of demand mathematically, the percent change in quantity demanded is equal to:
price elasticity of demand x percent change in price
A _____ does two things; it raises prices, and it lowers the quantity sold
price floor
increase in income leads to an increase in
quantity supplied
The increase in income leads to an increase in ______. This is because, as demand increases, _______ .
quantity supplied; the equilibrium quantity moves up the supply curve to a higher price and more quantity supplied .
Taxes pose an economic burden on buyers and sellers. Taxes tend to _____the quantity demanded and the quantity supplied of the taxed goods, as consumers pay _____, and sellers receive _____.
reduce; more; less
an elastic demand curve is _____, while an inelastic demand curve is ___
relatively flat; relatively steep
If the supply of green tea rises, the equilibrium quantity will _____ the equilibrium price will_____
rise and fall
As a result of the decline in available flu vaccines, the equilibrium price should ________ significantly, and the equilibrium quantity should _____ .
rise significantly and fall significantly
if a new tax on sellers of $0.20 per 20- ounce bottle of soda is introduced, the supply curve __ until it lies_____ higher
shifts left; $0.20
The average price of gasoline is $3.25 per gallon in your town. . At a price of $0.50 per gallon, there would be a __________ as the amount of gasoline people are willing and able to buy __________ the amount of gasoline gas stations are willing and able to sell
shortage; exceeds
You are a pricing manager at a generic pharmaceutical distributor. The CEO of the company calls a meeting of all the managers and states that it is critical to increase revenue soon or you may have to start laying off employees. You know that the price elasticity of demand for your leading generic drug is 1.5 and you sell it for three times what it costs. As the pricing manager, you should
suggest decreasing the price on the leading generic drug to increase revenue.
A tax on sellers leads to an increase in the marginal cost equal to the tax and therefore shifts the _____ curve to the _____ to reflect the new, higher marginal cost.
supply; left
quotas set by the government limit tases in many cities. A quota that restricts ______ leads to higher prices and a ___ quantity sold
supply; lower
The average price of gasoline is $3.25 per gallon in your town. At a price of $6.00 per gallon, there would be a _____ as the amount of gasoline people are willing and able to buy is ____ than the amount of gasoline gas stations are willing and able to sell.
surplus; less
as demand increases, the equilibrium quantity moves _____ the ______ curve to a higher price and more quantity supplied
up; supply
the deduction on your pay stub for the FICA tax is:
your half of the payment toward your social security
if cutting the price of frozen pizza by 30% leads to an increase in the quantity demanded by 6%, what is the absolute value of price elasticity of demand from the frozen pizza.
0.2
if cutting the price of automobiles by 20% leads to an increase in the quantity demanded by 5%, what is the absolute value of the price elasticity of demanded for automobile?
0.25
if cutting the price of milk by 20% leads to an increase in the quantity demanded by 10%, what is the absolute value of the price elasticity of demand for milk?
0.5
A dust storm destroys the majority of a farmer's peanut crop, causing him to raise the price of his peanut butter. What kind of shift does this create in the market for jelly, a complement to peanut butter?
Decrease in demand