ECON 201 Module 2

With fewer substitutes, demand tends to be

less elastic, less substitutes, not really any varying choice for the consumer.

Assuming everything else stays the same, an increase in the price of laptop computers will __________ of laptop computers. a) decrease the quantity demanded b) increase the demand c) increase the quantity demanded d) decrease the demand

decrease the QUANTITY DEMANDED A price change of a good can only impact the quantity of demand.

Which of the following factors would most likely cause a shift in the demand curve for candles? An increase in the price of wax used to make candles. Falling incomes, due to a weakening economy. A decrease in the number of factories making candles. Improved technology that makes candles less costly to produce.

Falling incomes, due to the weakened economy. Income is a determinant of demand. Rising incomes increase purchasing power, leading to increase of demand. In contrast, falling income leads to decrease in demand for all normal goods.

Which of the following would cause the demand curve for ice cream to shift to the right? A reduction in the cost of producing ice cream. A rise in the price of popsicles, a substitute for ice cream. A reduction in the price of ice cream. An unexpected cold and rainy summer season.

A rise in the price of Popsicle, a substitute for ice cream. When the substitute inflates, people who used to consume Popsicle will switch to ice cream, causing the demand curve to switch to the right.

Consider the demand for socks. What would cause a movement from one point on the demand curve to a point further down the curve?

A sale on socks. A market demand curve reflects the law of demand (quantity demanded varies inversely with price), Typically demand curves are downward sloping, and a sale (sale will lower price of socks) would instigate movement from one point to another.

The supply curve is upward-sloping because higher prices ________. make customers willing to pay more for a good are needed to reflect higher marginal utility encourage customers to switch to substitute goods are needed to cover higher marginal costs

Are needed to cover higher marginal costs- An upward sloping supply curve reflect the assumption of diminishing marginal productivity, which entails a rising marginal cost. AS the out put increases, marginal costs rise and higher prices are needed to cover the marginal cost.

Is cosmetic surgery more or less elastic than emergency surgery?

Cosmetic surgery is more elastic since it is more of a luxury than an emergency.

If cream cheese and bagels are complements, then an increase in the price of cream cheese will _______ for bagels

Decrease- AN increase of price of cream cheese means fewer bagels will be demanded (no one wants to buy the expensive bagel and cream cheese combo anymore)

During the Obama administration, the development of low‑cost batteries for electric cars received large amounts of federal funding via subsidies. Meanwhile, American households gave a higher priority towards minimizing their environmental impact. Consider the market for zero‑emissions electric vehicles, where there is an upward‑sloping supply curve and a downward‑sloping demand curve. How will demand and Supply shift? What will happen to the equilibrium price?

Demand and Supply would both shift to the right. Input of electric car receiving lots of support, cost of production will reduce, affecting the supply (as it increases). Now the households want to minimize thier impact on enviornment, so demand will increase too, and shift to the right. - Change is ambiguous, since the curves shifted together at the same proportion.

If farmers begin using better fertilizers to grow corn, we would expect a(n) __________ in the supply of corn. a) small decrease b) no change c) large decrease d) increase

INCREASE Improvement of technology makes it easier to grow corn

Which of the following is most likely to shift the supply curve for pet grooming services leftward? An increase in the number of pet groomers seeking employment. A rise in the price of pet grooming services. An increase in the cost of pet grooming supplies. A decrease in the number of owners taking their pets to be groomed.

INCREASE in the cost of pet grooming supplies, increase of tools will push the cost of production, so then firm will only be able to supply lesser at the same price.

What does the price change effect? the demand or supplu?

IT affects the DEMAND

A shortage of the ECON textbook will do what to the price?

Increase the price, so the firms can alleviate the demand pressure and produce enough textbooks to satisfy the demand.

Is short term electricity consumption less elastic or more elastic than long term electricity consumption?

Short term is less elastic, since one can adjust their energy usage.

Which statement is the best definition of the price elasticity of demand? The absolute value of the slope of the demand curve. The ratio of the percent change in price to the percent change in quantity demanded. The ratio of the percent change in demand to the percent change in income. The ratio of the percent change in quantity demanded to the percent change in price.

The ratio of the percent change in quantity demanded to the percent change in price

College students often buy cheap pizza because it is more affordable. Suppose after graduating, college students find high-paying jobs. The demand for cheap pizza will likely: increase because demand for cheap pizza is positively related to income. increase because demand for cheap pizza is negatively related to income. decrease because demand for cheap pizza is positively related to income. decrease because demand for cheap pizza is negatively related to income.

decrease because demand for cheap pizza is negatively related to income.

Over longer periods of time, demand tends to be

more elastic bc more substitute goods are discovered or behavior is adjusted.

Demand for a luxury item tends to be

more elastic, a small change in price has a bigger change on the quantity demanded.

Demand for an item that uses a larger portion of your budget tends to be

more elastic, inexpensive items are less elastic, worth the time to look for a less expensive alternative