econ final review
assume that the demand curve for romance novels is downward sloping. If the price of a book increases from $4.95 to $5.95,
the quantity demanded for romance novels will decrease
opportunity cost is best defined as
the value of the best foregone alternative
the price of season tickets to a performing arts theater decreases by 3%. as a result the quantity demanded increases by 6%. The price elasticity of demand for season tickets is
2
suppose you are given the following data on demand for a product. The price elasticity of demand when price decreases from $9 to $7 is price -- Qd $10 -- 30 $9 -- 40 $8 -- 50 $7 -- 60 $6 -- 70
((60-40)/((60+40)/2))/((7-9)/((7+9)/2)) (20/50)/(-2/8) =1.60
Perfectly competitive markets explained on the basis of supply and demand
assume many buyers and many sellers of a standardized product
Consumer surplus arises in a market because
some consumers are willing to pay more than the equilibrium price but do not need to do so
an increase in demand means that
the demand curve has shifted to the right
If country a has a comparative advantage in the production of good x over country b, then
the domestic opportunity cost of producing x in country a is lower than in country b
The law of diminishing returns indicates that
As extra units of a variable resource are added to a fixed resource, marginal product will decline beyond some point
Other things equal, if the fixed costs of a firm were to increase by $100,000 per year, what would happen?
Average fixed costs and average total costs would rise
are the goods that businesses offer for "free" to consumers also free to the society?
No, because scarce resources were used to produce the free goods
when an economy is at full employment and full production more of any one product
can be produced only if there is less production of some other products
there will be a surplus of a product when
consumers want to buy less than produces offer for sale
if demand for farm crops is inelastic, a good harvest will cause farm revenue to
decrease because of a percentage fall in price greater than the percentage increase in quantity sold
As a consequence of the condition of scarcity
individuals and communities have to make choices from among alternatives
if the price of a product rises, and as a result businesses increase their production then
quantity supplied has increased
the law of supply
reflects the amounts that producers want to offer at each price in a series of prices
a shift in the demand for gasoline would result if
significantly more people decided to use mass transit than travel by automobile
# of workers --- units of output 0 --- 0 1 --- 40 2 --- 90 3 --- 126 4 --- 150 5 --- 165 6 --- 180 According to the data above, diminishing returns become evident with the addition of the
third worker
