econ exam 2

if the absolute value of the price elasticity of demand for tickets to a football game is 2, then if the price increases by 1%, quantity demanded decreases by

2%

suppose that at a price of 25 cents per orange, 500 consumers each demand 4 oranges, and at a price of 20 cents per orange, 750 consumers each demand 5 oranges. therefor, the market demand for oranges is _________ at a price of 25 cents per orange and __________ at a price of 20 cents per orange.

2000; 3750 500x4 = 2000 750x5= 3750

The short-run is best defined as ...

a period of time sufficiently short that at least one factor of production is fixed.

Graph problem

add quantity demanded at the point listed is stated for both lines.

A good's real price is

dollar price of the good relative to the average dollar price of all other goods and services. nominal/ave. of all prices =real price

Graph problem

elasticity of demand= (slope/1) / (price/quantity demanded)

To produce 150 units of output , a firm must use 3 employee-hours. to produce 300 units of output , the firm must use 8 employee-hours. apparently, the firm is...

experiencing diminishing returns.

It takes many years to train to become an orthopedic surgeon. This suggests that, in the short run, a sudden increase in the demand for orthopedic surgeons will...

have little effect on the number of trained orthopedic surgeons

suppose there is only one small clothing store in the remote village of green acres, and until recently the townspeople bought there their shirts there. as more people connected to the internet, the price elasticity of demand for shirts in the town store will...

increase because the internet offers more substitutes.

if demand is ________ with respect to price , a price increase will ________ total revenue.

inelastic; increase If demand is inelastic with respect to price , a price increase will increase total revenue.

If a demand curve is horizontal at P=$5, then the price elasticity of demand is

infinite

Fixed cost

$50 - in this question is is the rent because it does not change

elasticity id curve has the point (0,0)

ALWAYS 1

Jenny sells lemonade in front of her house house in the summer. Several other kids in jenny's neighborhood also run lemonade stands in the summer. suppose that the first week of summer, Jenny charges 25 cents for an 8-ounce cup of lemonade, her next door neighbor Sam charged 50 cents for an 8-ounce cup of lemonade, and Alex across the street charged 15 cents for an 8-ounce cup of lemonade. Assuming the market for lemonade is perfectly competitive, what is most likely to happen?

Eventually prices will equalize across all three lemonade stands.

Bases on table from question 17

MR= (Y2-Y1)t =(D2-D1)Q

suppose you learn that in 1900, house holds spent about 40 percent of their budget on food, and today, they spend about 10 percent of their budget on food. all else equal, this suggests that the price elasticity of demand for food...

is probably lower now than it was in 1900

the demand for a good is inelastic with respect to price if the price elasticity of demand is

less than 1

if the demand for salad dressing increases when the price of lettuce decreases, the cross-price elasticity of demand between salad dressing and lettuce will be _____ because these two goods are ________.

negative; compliments if the demand for salad dressing increases when the price of lettuce decreases, the cross-price elasticity of demand between salad dressing and lettuce will be negative because these two goods are compliments .

9 employee-hours, it earns a daily _______________ of _______________.

profit; Profit = (output per day x price per unit) - (variable (9) x hourly wage) - fixed cost

In surveying their alumni, State U's economics department discovered that ramen noodle consumption declined once students graduated and found jobs. One conclusion the survey team might draw from the results is that...

ramen noodles are an inferior good.

The law of demand indicates that as the cost of an activity...

rises, less of the activity will occur.

Based on a worded question and table

the 1st hour John spends cleaning windows cost him $7 that he could have earned in the grocery store.

Suppose that if the price of plane tickets increased, more people would choose to travel by train. if this happened, you would know that...

the cross-price elasticity between plane tickets and train tickets is positive. substitutes

Individual supply curves generally slope ________ because ________ .

upward; of increasing opportunity costs. Individual supply curves generally slope upwards because of increasing opportunity costs.