economics unit 3
the demand for a product is unit elastic. at the price of $10, 20 units of a product are sold. if the price increased to $20, then one would expect sales to equal:
10 units
ryans auto care knows that a 5 percent increase in the price of their oil changes results in a 15 percent decrease of number of oil changes purchased. what is the elasticity of demand facing ryans auto care?
3.0
refer to the budget line shown in the diagram above. at point U, _
P1/P2= MU1/MU2
refer to the diagram above. what is the significance of the point at the top of the backward bending of the supply curve marked L3?
as wages increase over this range, the quantity of hours worked actually decreases
refer to the diagram above. which of the following statements is true
backward bending supply curves for labor are not typical in the short run
which of the following is true when demand is inelastic?
buyers are not very responsive to changes in price
how can total utility be determined
by summing up the marginal utilities of each unit consumed
which of the following medical services is likely to have the largest income elasticity of demand?
cosmetic surgery
the shorter the time considered, the more the elasticity of supply of a good tends to:
decrease
of the following factors, which is most likely to cause variation in american household spending patterns
each of the above will cause a variation
___ demand is when the quantity demanded is very responsive to the price changes
elastic
a price reduction will increase the total revenue a firm receives when demand for its product is which of the following
elastic
Taxes on goods with __________ demand curves will tend to raise less tax revenue for the government than taxes on goods with __________ demand curves.
elastic; inelastic
to graph a perfectly elastic supply curve, draw a line which is
horizontal
what does price elasticity of demand measure?
how responsive a quantity demanded is to a change in price
the term __ describes a situation where a __ causes a reduction in the buying power of income, even though actual income has not changed
income effect; higher price
the price elasticity of demand for tickets to local concerts is estimated to be at 0.78. in order to boost ticket revenues, an economist would advise:
increasing the price of game tickets because demand is inelastic
if the managers of a restaurant plan to raise drink prices to increase revenues, then they must believe that demand is
inelastic
for which of the following products is demand most likely to be perfectly inelastic
insulin
the additional utility provided by one additional unit of consumption is referred to as
marginal utility
demand in the graph above (straight up) is
perfectly inelastic
the definition of price elasticity of demand is best stated as:
price elasticity of demand is the percentage change in quantity demanded divided by the percent change in price
youre in charge of sales at a food company. company wants to earn as much revenue as possible. if the elasticity of demand for your company's product is at 0.6 would you advise the company to raise the price, lower the price, or keep it the same
raise the price
if the supply curve an essential good is perfectly inelastic, then a reduction in demand will cause the equilibrium price of that good to
rise and the equilibrium quantity to fall
if the demand curse for an essential good is perfectly inelastic, a reduction in supply will cause the equilibrium price of that good to:
rise and the equilibrium quantity to stay the same
the substitution and income effects that result from a change in the price of a good or service help to explain:
the direct relationship between income and demand
if the demand for a product were completely elastic, on whom would the burden of increased costs fall?
the manufacturer
this often occurs simultaneously with the income effect
the substitution effect
if frozen tacos and iced frozen burritos are good substitutes for consumers, then it is likely that:
their cross price elasticities are greater than zero.
under what circumstances can manufacturers of goods pass increased costs along to the consumers
when the demand for the product is inelastic
