ECO 201 Exam 1 Miami Moody
When the price of a loaf of garlic bread increases by 4 percent, the quantity of lasagna demanded decreases by 2 percent. Calculate the cross elasticity of demand for lasagna with respect to the price of a loaf of garlic bread. The cross elasticity of demand for lasagna with respect to the price of a loaf of garlic bread is _______ Garlic bread and lasagna are _______
-.5;Complements
When the price of air travel increases by 5 percent and the price of a train ride remains unchanged, the quantity of train rides demanded increases by 5 percent. Calculate the cross elasticity of demand of train rides with respect to air travel. The cross elasticity of demand of train rides with respect to air travel is
1
If the quantity demanded of textbooks decreases by 90 percent when the price of a textbook rises by 50 percent, what is the price elasticity of demand for textbooks? The price elasticity of demand for textbooks is
1.8
The price at which sellers are not willing to supply a good is $500 per unit. If the supply curve passes through the point (4, 512), what is the equation of the supply curve? The equation of the supply curve is P =_+_QS
500;3
The price at which no one is willing to buy a good is $550 per unit. If the demand curve passes through the point (2, 534), what is the equation of the demand curve? The equation of the demand curve is P = _-_QD
550;8
Elle owns an ice cream parlor. In an hour she can produce 11 milkshakes or 55 ice cream sundaes. Ben also owns an ice cream parlor. In an hour he can produce 5 milkshakes or 20 ice cream sundaes. Calculate Elle's and Ben's opportunity cost of a milkshake. Elle's opportunity cost of 1 milkshake is __ ice cream sundaes. Ben's opportunity cost of 1 milkshake is __ ice cream sundaes. ______ has a comparative advantage in milkshakes and ______ has an absolute advantage in both goods. A. Ben; Elle B. Ben; Ben C. Elle; Ben D. Elle; neither
5;4;A
A curve on a graph shows the relationship between apartment rent in a town and the quantity of apartments that people want at each rent. A new industry enters the town and the population of the town increases. When the population increases, _________. A. The curve shifts B. The price of an apartment falls C. There is a movement downward along the curve D. We can no longer isolate the variable of interest
A
A decrease in the supply of computers brings a ______ of computers at the original price and a ______ in their price A. Shortage; rise B. Surplus; rise C. Shortage; fall D. Surplus; fall
A
A relationship with a maximum _______. A. Starts out sloping upward, and then slopes downward B. Starts out sloping downward, and then slopes upward C. Indicates that two variables become less related over time D. Becomes steeper as you move to the right along the curve
A
American Airlines announced yesterday that it will begin charging passengers $15 for their first piece of checked luggage, in addition to raising other fees and cutting domestic flights as it grapples with record-high fuel prices. The news clip illustrates a change in the supply of flights when it reports that American Airlines is _______. A. Cutting the number of flights with no mention of a change in the airfare B. Charging $15 to check a bag so that it can cut the number of flights C. Paying more for fuel and charging people to check a bag D. Charging $15 for a checked bag, which will cut the number of air travelers
A
An increase in the demand for donuts together with a decrease in the supply of donuts brings a ______ of donuts at the original price and a ______ in their price. A. Shortage; rise B. Surplus; fall C. Shortage; fall D. Surplus; rise
A
Apple, the consumer electronics giant, on Tuesday rolled out new versions of its popular iPad tablet. Suppose when the price of an iPad decreases by 20 percent, the number of songs downloaded on iTunes increases by 30 percent. Based on this information iTunes are A. Complements to iPads B. An inferior good C. Substitutes for iPads D. A normal good
A
By remaining in school, you are paying an opportunity cost that includes _______. A. The wages you could earn if you took a job B. The money you spend on clothes C. The time you spend doing laundry D. The money you spend on late night snacks
A
Economics is all of the following except _______. A. A subject that tells countries what goods they must trade B. A social science C. A subject that arises because we want more than we can get D. A subject that is divided into microeconomics and macroeconomics
A
Entrepreneurship ______. A. Is the human resource that organizes labor land and capital B. Earns rent C. Is the work time and work effort that people devote to producing goods and services D. Is not a factor of production
A
Goods and services are ______. A. The objects that people value and produce to satisfy human wants B. The things that one person produces or performs purely for the benefit of other people C. The gifts of nature D. Any objects that get produced or tasks that get performed
A
If demand is elastic, a 1 percent price cut ______ the quantity sold by ______. A. Increases; more than 1 percent B. Decreases; more than 1 percent C. Increases; less than 1 percent D. Decreases; 1 percent
A
If the cross elasticity of demand for hotdogs with respect to the price of a bottle of ketchup is negative, hot dogs and ketchup are ______. A. Complements B. Substitutes C. Inferior goods D. Normal goods
A
If the price of an MP3 player falls from $60 to $20, while all other influences on buying plans are unchanged, the quantity of MP3 players demanded _______? A. Increases B. Decreases C. Remains unchanged
A
Suppose a concert pianist practices the piano for 6 hours every day, but to prepare for an upcoming concert, she decides to practice for an extra hour. The _____ of one more hour of practicing nbsp is _____. A. Marginal cost; an hour of reading, if that is her best alternate use of the time B. Marginal cost; an hour of reading, missing her favorite TV program, and missing her favorite concert broadcast on the radio C. Total cost; 7 hours spent practicing D. Total cost; an hour of reading, and missing her favorite TV program
A
Suppose that the United States and Cuba decide to open up trade. If each country specializes in the good in which it has a comparative advantage, ______ will gain from that trade because ______. A. Both countries; consumption possibilities in both Cuba and the United States will lie outside their PPFs B. Neither country; their consumption possibilities will not change C. Only Cuba; consumption possibilities in Cuba will lie outside its PPF and U.S. consumption possibilities will not change D. Only the United States; consumption possibilities in Cuba will lie outside its PPF and U.S. consumption possibilities will not change
A
Suppose that when you study 4 hours for an exam your mark is 80 percent. If you study for an extra hour your mark is 85 percent. Choose the correct statement. A. The marginal benefit from studying one more hour is 5 percent B. The marginal cost of studying one more hour is 85 percent C. The marginal increase from studying one more hour is 15 percent D. The marginal benefit from studying one more hour is 80 percent
A
Taking an MP 3 player to the gym when you work out becomes more popular. As a result, _______. A. The demand for MP 3 players increases B. The demand for MP 3 players decreases C. The quantity of MP3 players demanded increases D. The quantity of MP3 players demanded decreases
A
The market for frozen burritos is a competitive market _______. A. If many people buy and many firms sell frozen burritos, so no single buyer or seller can influence the price B. Only if the buyers and sellers of frozen burritos are spread around the world and never meet C. If many people buy frozen burritos, but only a few firms sell frozen burritos D. If few people buy frozen burritos, so sellers can hold out for a high price
A
When Yvonne's income increases by 10 percent, her demand for tickets to professional basketball games increases by 20 percent. Yvonne's demand for tickets is income ______. For Yvonne, basketball tickets are ______ good. A. Elastic; a normal B. Elastic; an inferior C. Inelastic; a normal D. Inelastic; an inferior
A
When the price of a gallon of gasoline falls by 2 percent, Tony increases the quantity he buys by 5 percent. Tony's expenditure on gasoline _______. A. Increases B. Decreases C. Remains the same D. Increases, decreases, or remains the same depending on how much driving he plans to do that week
A
When you make a choice in your self-interest, _______. A. That choice may also be the best choice for society B. That choice is the one you think is best for everyone else but not for you C. That choice is a selfish choice because it increases your income at the expense of someone else D. That choice is inappropriate if it causes someone else to lose their job
A
_______ is an example of _______. A. An auto worker; labor B. Martha Stewart; capital C. A sewing machine in a Levi's production plant; land D. A coal mine in West Virginia; entrepreneurship
A
The price of oil rises if the demand for oil ______ and the supply of oil ______. A. Increases; decreases B. Decreases; increases C. Decreases; decreases D. Increases; increases A shortage in the market for oil implies that ______. A. More people are traveling B. The market for oil is a competitive market C. The market for oil needs government action D. The price of oil is being prevented from influencing buying and selling plans
A;D
The demand for a necessity is income ______ and the demand for a luxury is income ______. A. Inelastic; elastic B. Inelastic; inelastic C. Elastic; elastic D. Elastic; inelastic In countries with low incomes, such as Tanzania and India, the income elasticity of food is ______ than in countries with high incomes, such as Canada and the United States.
A;Higher
A demand curve passes through the point (0,550) and has slope equal to -5. The equation of the demand curve is _______. A. QD = 550 - 5P B. P = 550 - 5QD C.P = 3 - 550QD D. P = 550 + 5QD
B
Along a curve showing a linear relationship, for each increase in x of one unit, y _______. A. Changes by increasing amounts B. Changes by the same amount C. Changes by decreasing amounts D. Remains constant
B
Choose the correct statement. A. Competitive equilibrium occurs when demand equals supply B. The competitive market pushes the quantity produced to its efficient level C. When the efficient quantity is produced in a competitive market, producer surplus is maximized D. When the efficient quantity is produced in a competitive market, consumer surplus is maximized
B
Choose the correct statement. A. The value of one more unit of a good or service is its marginal benefit, and we measure marginal benefit by the area under the demand curve B. The value of one more unit of a good or service is its marginal benefit, and we measure marginal benefit by the maximum price that is willingly paid for another unit of the good or service C. The price of one more unit of a good or service is its marginal benefit D. The value of one more unit of a good or service is equal to the price of one more unit of a good or service
B
Choose the statement that is incorrect A. Economics can't help with the normative part of a policy goal B. Governments can make better decisions by using the tools of economics, but businesses require the tools of business administration, not economics C. For a given goal, economics compares the marginal benefit from achieving the goal with its marginal cost to find the best use of the available resources D. All the policy questions involve a blend of positive and normative questions
B
The income earned by the people who sell the services of the factor of production _______ is called _______. A. Land; wages B. Entrepreneurship; profit C. Capital; profit D. Labor; interest
B
Dan sells newspapers. Dan says that a 8 percent increase in the price of a newspaper will decrease the quantity of newspapers demanded by 10 percent. According to Dan, the demand for newspapers is _______. A. Perfectly elastic B. Elastic C. Unit elastic D. Inelastic
B
Every day, we make many choices. We can't avoid having to make choices because ________. A. There are too many TV channels B. Our wants exceed the resources available to satisfy them C. We keep changing our minds D. There is too much available E. There is too much variety
B
Human capital _______. A. Is the human resource that organizes labor and land B. Determines the quality of labor C. Is measured by the amount of income a person earns D. Is a gift of nature
B
If the demand curve is a downward sloping straight line, the price elasticity of demand always A. Increases as the demand curve shifts rightward B. Increases with movements upward along the demand curve C. Decreases with movements upward along the demand curve D. Increases as the demand curve shifts leftward
B
If the price of a sundae rises, a ______ the demand curve occurs. If any factor that influences buying plans other than the price changes, then a ______ the demand curve occurs. A. Rightward shift of; movement down along B. Movement up along; shift of C. Leftward shift of; movement up along D. Movement down along; shift of
B
Jessica has five job offers to choose from. Working for a consulting firm would pay her $100 per hour. Working as an economist would pay her $80 per hour. Working as a teacher would pay her $40 per hour. Working as a nanny would pay her $20 per hour. Working at a fast food restaurant would pay her $10 per hour. What is Jessica's opportunity cost of working as an economist? A. $40 B. $100 C. $20 D. None of the above are correct E. $80
B
Leigh has two sandwiches for lunch. The marginal benefit that Leigh receives from the second sandwich is _______. A. The opportunity cost of producing two sandwiches B. The maximum amount that she is willing to pay for the second sandwich C. The opportunity cost of producing the second sandwich D. The maximum amount that she is willing to pay for two sandwiches
B
Microsoft's marginal cost of the 100th copy of Microsoft Windows 8 is _______. A. The maximum amount that someone is willing to pay Microsoft to obtain the coding that supports Windows 8 B. The opportunity cost of producing the 100th copy of Windows 8 C. The opportunity cost of producing 100 copies of Windows 8 D. The maximum amount that someone is willing to pay for the 100th copy of Windows 8
B
The equilibrium quantity _______. A. Is the quantity demanded at the equilibrium price, but not necessarily the quantity sold B. And equilibrium price are determined at the intersection of the supply curve and the demand curve C. Is the quantity supplied at the equilibrium price, but not necessarily the quantity demanded D. Is any quantity at which the quantity supplied is greater than or equal to the quantity demanded
B
When the efficient quantity is produced _______. A. Buyers and sellers acting in their self-interest do not promote the social interest B. Total surplus is maximized C. Consumer surplus is maximized D. Producer surplus is maximized
B
Which of the following items is an example of a tradeoff? A. The government spends more on homeland security and more on Medicare B. The government spends more on homeland security and less on Medicare C. The government spends the same amount on homeland security and Medicare D. The government spends less on homeland security and less on Medicare
B
Are either or both of these newspaper headlines positive or normative? 1. The minimum wage should not be increased. nothing 2. An increase in the minimum wage will bring more teenage unemployment. nothing Statement 1 is a ______ statement because it ______ be tested. A. positive; cannot B. normative; cannot C. positive; can D. normative; can Statement 2 is a ______ statement because it ______ be tested. A. positive; can B. positive; cannot C. normative; can D. normative; cannot
B; A
A decrease in the demand for hot dogs brings a ______ of hot dogs at the original price and the market price will ______ . A. Surplus; rise B. Shortage; rise C. Surplus; fall D. Shortage; fall
C
A shortage occurs at a given price when ______. The price _____ to reach equilibrium. A. Demand is greater than supply; rises B. The quantity supplied is greater than the quantity demanded; falls C. The quantity demanded is greater than the quantity supplied; rises D. Supply is greater than demand; falls
C
Assume that your state government has placed a price ceiling of $.20 per kilowatt hour on electricity. The equilibrium price per kilowatt hour for electricity is $.25. The government's action will result in A. An increase in producer surplus B. Surplus of electricity in the electricity market C. A deadweight loss D. An increase in the price of electricity to $.25 per kilowatt hour
C
Choose the correct statement. A. The price of one more unit of a good or service is its marginal cost B. The cost of producing one more unit of a good or service is equal to the market price C. The cost of producing one more unit of a good or service is its marginal cost, which is the minimum price that producers must receive to induce them to offer to sell another unit of the good or service D. The cost of producing one more unit of a good or service is the producer's marginal cost, and we measure marginal cost as the area above the supply curve and below the market price
C
Choose the statement about monopoly that is incorrect. A. A monopoly sets its price to achieve its self-interest B. Local water supplier is a monopoly C. A monopoly produces more than the efficient quantity and charges too high a price D. A monopoly is a firm that is the sole provider of a good or service
C
Dan sells newspapers. Dan says that a 4 percent increase in the price of a newspaper will decrease the quantity of newspapers demanded by 8 percent. According to Dan, the demand for newspapers is ________. A. Inelastic B. Perfectly elastic C. Elastic D. Unit elastic
C
Deadweight loss _______. A. Is the decrease in producer surplus that results from a decrease in price when demand decreases B. Occurs in markets that produce at the competitive equilibrium and in markets that produce more than the quantity at the competitive equilibrium C. Is the decrease in total surplus that results from an inefficient level of production D. Occurs only when production is greater than the efficient quantity
C
Economics explains the choices that end up determining ______ goods and services get produced. A. Why, where, and how B. What, how, and when C. What, how, and for whom D. Where, when, and how
C
French fries and baked potatoes are _______. A. Complements but not complements in production B. Complements or complements in production C. Substitutes or substitutes in production D. Substitutes but not substitutes in production
C
If demand for good is very inelastic and supply for the good is very elastic a sales tax imposed on sellers will cause the price received by sellers A. Would rise by more than the amount of the tax B. Would fall by an amount of the tax C. Would not change very much D. Would fall by more than the amount of the tax
C
If the price of a video rental is below its equilibrium price, there will be a ________ of video rentals and the price will ________. A. Surplus; rise B. Surplus; fall C. Shortage; rise D. Shortage; fall
C
If, as the price of a DVD player decreases, the quantity of DVDs that people buy increases, then DVD players and DVDs are _______. A. Substitutes B. Inferior goods C. Complements D. Normal goods
C
Producers of MP 3 players expect the price of a factor of production used to produce an MP 3 player to rise and the number of firms producing and selling MP 3 players to decrease. You predict that the price of an MP 3 player will ______ and the quantity of MP 3 players bought will ______. A. Either rise, fall, or remain the same; decrease B. Fall; increase, decrease. or remain the same C. Rise; decrease D. Either rise, fall, or remain the same; increase
C
Sally and Eric are the only people in an economy. Sally buys 3 bottles of water when the price is $2 a bottle, 4 bottles of water when the price is $1, and 5 bottles when the price is $0.50. Eric buys 10 bottles of water when the price is $0.50 and 5 bottles of water when the price is $1, and no battles when the price is $2 a bottle. In the market for water, the quantity demanded _______. A. Is 8 bottles at a price of $2 a bottle B. Increases as the price rises C. Increases as the price falls D. Is 4 bottles at a price of $1 a bottle
C
The law of demand states that ______, the ______ the price of a good, the smaller is the quantity demanded. A. Even when other factors change; lower B. Other things remaining the same; lower C. Other things remaining the same; higher D. Even when other factors change; higher
C
The market supply curve is the ______ sum of the individual supply curves. It is formed by adding the ______. A. Vertical; marginal cost of all producers at each quantity B. Vertical; quantities supplied by all the producers at each price C. Horizontal; quantities supplied by all the producers at each price D. Horizontal; marginal cost of all producers at each quantity
C
The quantity of CDs that firms plan to sell this month depends on all of the following except the A. Wage rate of workers who produce CDs B. Number of producers of CDs C. Quantity of CDs that people plan to buy D. Price of a CD
C
The supply curve passes through the point (0, 350) and has slope equal to 7. The equation of the supply curve is _______. A. P = 7 + 350QS B. QS = 350 + 7P C. P = 350 + 7QS D. P = 350 - 7QS
C
The supply of apples in the short run will be ______ than the supply in the long run and ______ than the supply today. A. More elastic; more elastic B. More elastic; less elastic C. Less elastic; more elastic D. Less elastic; less elastic
C
When firms use new and better ways of producing all goods and services, _______. A. The opportunity cost of most goods falls to zero B. The opportunity cost of producing every good decreases C. Economic growth occurs, but it is not free D. The production possibilities frontier shifts inward nothing
C
Which of the following shifts the demand curve for hot dogs leftward? A. A decrease in the price of a hot dog bun B. An increase in the price of a hamburger C. An increase in the price of a hot dog bun D. An increase in the price of a hot dog
C
Which of the following topics is studied in macroeconomics A. Big businesses B. The choices that individuals make C. The national economy and the global economy D. All aspects of scarcity
C
A relative price is _______. A. The price that you pay for two goods that you use simultaneously, like coffee and cream B. What you get paid for babysitting your cousin C. Always greater than a money price D. An opportunity cost
D
All of the following items are sources of inefficiency except _______. A. Price and quantity regulations B. Public goods and common resources C. High transactions costs D. An increase in supply
D
An external benefit is a benefit that _______. A. Is greatest at the equilibrium point B. Experiences increasing marginal returns C. Always equals external cost D. Affects someone other than the buyer of a good
D
Bottled water and health club memberships are _______. A. Substitutes B. Complements in production C. Substitutes in production D. Complements
D
Choose the correct statement. A. What we do in pursuit of our self interest is independent of the social interest B. You make choices based on what you think is best for society as a whole C. Social interest and self interest do not conflict D. Choices that are the best for society as a whole are said to be in the social interest
D
Choose the statement about incentives that is incorrect. A.With low computer prices, school boards have an incentive to connect more classrooms to the Internet B. An incentive can be a reward that encourages an action C. If the price of soda falls, a child has an incentive to buy more soda D. Incentives create scarcity
D
Choose the statement that is incorrect. A. Only the wants of the person making a choice are relevant to determine its rationality B. Economists view the choices that people make as rational C. A rational choice is one that compares costs and benefits and achieves the greatest benefit over cost for the person making the choice D. A rational choice will turn out to have been the best choice after the event
D
For the past year, Andre has played tennis once a month. He now decides to play tennis twice a month. You infer that for Andre, _______. A. The marginal benefit from a game of tennis must have increased B. The marginal cost of a game of tennis must have decreased C. Either the marginal cost of a game of tennis has increased or the marginal benefit has decreased D. Either the marginal benefit from a game of tennis has increased or the marginal cost has decreased
D
Harry produces 9 balloon rides and 5 boat rides an hour. Harry could produce more balloon rides without producing fewer boat rides. Harry is ______ his production possibilities frontier. A. Moving along B. Producing outside C. Producing on D. Producing inside
D
If as the price of nylon decreases, the quantity of lawn fertilizer that firms plan to sell decreases, then nylon and lawn fertilizer are _______. A. Substitutes in production B. Inferior goods C. Normal goods D. Complements in production
D
In the market for books, the supply of books will decrease if any of the following occur except ______. A. An increase in the price of paper B. A decrease in the number of book publishers C. An increase in the future expected price of a book D. A decrease in the price of a book
D
Marvin loves candy bars. As the price of a candy bar increases from $1.00 to $1.25 to $1.50, Marvin continues to buy a dozen candy bars every week. Marvin's demand for candy bars is _______. A. Elastic B. Unit elastic C. Illustrated by a horizontal demand curve D. Perfectly inelastic
D
Money is ______. A. A social arrangement that governs the ownership, use, and disposal of anything that people value B. An economic unit that hires factors of production and organizes those factors to produce and sell goods and services C. Any arrangement that enables buyers and sellers to get information and to do business with each other D. Any commodity or token that is generally acceptable as a means of payment
D
On most days the price of a rose is $1 and 80 roses are purchased. On Valentine's Day the demand increases so that the price of a rose rises to $2 and 320 roses are purchased. Therefore, the price elasticity of A. supply of roses is about 0.55 B. demand for roses is about 1.8 C. demand for roses is about 0.55 D. supply of roses is about 1.8
D
Price elasticity of demand is equal to the ______ divided by the ______. A. Price; quantity demanded B. Percentage change in price; percentage change in quantity demanded C. Quantity demanded; price D. Percentage change in quantity demanded; percentage change in price
D
Resource use is efficient when _______. A. Workers receive an income equal to that made by their employers B. New resources are constantly being discovered and no resource depletion occurs C. Wealth is spread equally throughout society D. It is not possible to make someone better off without making someone else worse off
D
The demand curve for bus rides is a downward-sloping straight line. The price elasticity of demand for bus rides _______. A. Is constant as the price of a bus ride falls or rises B. Increases as the price of a bus ride falls C. Decreases as the price of a bus ride rises D. Decreases as the price of a bus ride falls
D
The factors that influence the elasticity of supply are _______. A. The cross elasticity of demand and the price elasticity of demand B. The proportion of income spent on the good and resource substitution possibilities C. The proportion of income spent on the good and the time frame for the supply decision D. Resource substitution possibilities and the time frame for the supply decision
D
The price of oil hit a record high above $135 a barrel in May 2008 more than twice what it cost the year before. ... OPEC has so far blamed price rises on speculators and says there is no shortage of oil. If OPEC is correct, the price change could have occurred as a result of demand changing because of ______ in the expected price of oil and supply changing because of ______ in the expected price of oil. A. An increase; a decrease B. A decrease; a decrease C. A decrease; an increase D. An increase; an increase
D
Webster Dictionaries and Oxford Dictionaries are almost perfect substitutes. The price elasticity of demand for Webster Dictionaries _______. A. Is 1 B. Is almost zero C. Depends on the complements for dictionaries D. Is almost infinity
D
When calculating the price elasticity of demand, we calculate the change in the quantity demanded as the percentage of the average price and the change in the quantity as a percentage change of the average quantity because this method _______. A. Gives a units-free measure B. Is the only one that will calculate a value of zero when demand is perfectly inelastic C. Allows us to calculate the price elasticity of demand as a positive number D. Gives the same value for the elasticity regardless of whether the price falls or rises
D
Which method is used to allocate rooms in Florida during spring break? A. Command B. Contest C. Majority rule D. Market price
D
Which method is used to allocate the Academy Awards? A. Lottery B. Personal characteristics C. Command D. Contest
D
You want to play the piano You think hard about how to allocate the next hour between playing the piano and reading and decide to play the piano for the first 5 minutes and then spend 55 minutes reading. Your decision is an example of _______. A. Marginal tradeoffs B. Misallocating your time C. Marginal incentives D. Making a choice at the margin
D
If, as Adrienne's income decreases, her demand for magazines decreases, then for Adrienne, magazines are _______. A. A substitute B. A complement C. An inferior good D. A normal good
D
_______ choose the quantities of labor, land, capital, and entrepreneurship to sell or rent. _______ choose the quantities of factors of production to hire. A. Households and firms; Households and firms B. Firms; Firms C. Households; Markets D. Households; Firms
D
Estimates of the long-run response to past movements in [gasoline] prices imply that a 10 percent price rise causes 5 to 10 percent less consumption, other things being equal. ... The nationwide average price of gasoline surged 53 percent from 1998 to 2004, after adjusting for inflation. Yet consumption was up 10 percent in this period. Of course, many other things changed in this period. Perhaps most important, [incomes] grew by 19 percent. ... This would ordinarily be expected to push gasoline sales up about 20 percent. The price elasticity of demand for gasoline in the long run ______. A. Depends on the change in income B. Is zero. The quantity of gasoline demanded does not respond to a change in the price of gasoline. C. Ranges between 1 and 2 D. Ranges between 0.5 and 1 The income elasticity of demand implied by the information given in the news clip is ______ If other things remain the same except for the increase in income and the rise in price, the data for 1998 to 2004 implies that the price elasticity of demand for gasoline is approximately equal to ______
D; 1.05; .19
Ezra and Betsy grow turnips and potatoes. Ezra has a comparative advantage in producing turnips if _______ A. Ezra can produce for himself all the vegetables he wants B. Ezra can grow more turnips than Betsy can grow C. Betsy's opportunity cost of producing turnips is less than her opportunity cost of producing potatoes D. Betsy's opportunity cost of producing turnips is greater than Ezra's opportunity cost of producing turnips If Ezra also has an absolute advantage in growing turnips and potatoes, he will _______. A. Be unable to trade with Betsy B. Perform all activities at the lowest opportunity cost C. Have a comparative advantage in one activity but not both D. Have an equal opportunity cost in performing all activities
D;C
If a price cut increases total revenue, demand is ______. If a price cut decreases total revenue, demand is ______. A. Inelastic; elastic B. Unit elastic; inelastic C. Elastic; unit elastic D. Elastic; inelastic If a price cut leaves total revenue unchanged, demand is ______
D;Unit Elastic
Marginal revenue is: A. The revenue a person gives up to do their current job B. Revenue associated with secondary effects of production C. The amount by which the revenue of a good exceeds its cost D. None of the above are correct E. The additional revenue a person gets from performing one more unit of work
E
