Micro chapters 4 to 6

In May and June, tammy spent all her clothing budget on bathing suits and beach bags. Each bathing suit cost $75. At Tammys optimal choice, her marginal utility from the last bathing suit purchased is 300 and her marginal utility from the last beach bag purchased is 200. This means that each handbag must cost

$50

Which of the following results in a rightward shift of the market demand curve for labor

An increase in demand for the firm's product

The labor ___ curve(s) will shift ___ if there is an increase in productivity or an increase in the demand for the final product.

Demand; right

Demand is said to be ___when the quantity demand is very responsive to changes in price

Elastic

In micro economic terms, the ability of a good or a service to satisfy wants is called

Utility

Billy Bob's barbershops knows that a 5% increase in the price of the haircut results in a 15% decrease in the number of haircuts purchased. what is the elasticity of demand facing Billy Bob's barbershop?

3.0

Rick eats only french fries and burgers at his office cafeteria. His weekly lunch budget is $48. Each burger cost six dollars and each order of fries cost three dollars. When deciding how much of each good to buy, Rick know that two burgers and four orders of french fries will give him a utility of eight. At his utility maximizing point ricks utility is

32

For lunch, Wendy eats only a salad or fruit and yogurt smoothies. Her weekly food budget is $48. Each salad cost six dollars and each smoothie cost three dollars. When deciding how much of each good to buy, Wendy knows that to sell it in for smoothies will give her a utility of eight. What is Wendy of utility maximizing point

4 salads, 8 smoothies

Suppose that Bobo purchases one pizza per month when the price is $19 and three pizzas per month when the price is $15. What is the price elasticity of bobos demand curve

4.25

Which of the following will not result in a leftward shift of the market demand curve for labor

An increase in the wage rate

Marginal utility can

Be positive, negative, or zero

Several types of economic events can cause a shift in labor demand, so that a higher or lower quantity of labor is hired at every salary or wage. List three of these events

Changes in education and training, changes in technology, changes in government regulations

When demand is inelastic

Consumers are not very responsive to changes in price

A 10% decrease in the price of a potato chips leads to a 30% increase in the quantity of soda demanded. It appears that

Cross price elasticity of demand for soda is -3

Substitution and income effects of a change in price of a good may be used to explain the

Direct relationship between income and demand

A price cut will increase the total revenue of a firm receives if the demand for its product is

Elastic

When economists are sketching examples of a demand or supply curve that is close to horizontal, they referred to that demand or supply curve as

Elastic

If the demand for software engineers ___ slower than the supply, then wages of software engineers will ___

Increases; fall

The price elasticity of demand for tickets to local baseball games is estimated to be equal to 0.89. In order to boost ticket revenue, and economist would advise

Increasing the price of game tickets because demand is inelastic

When economists are sketching examples of demand and supply, it is common to sketch a demand or supply curve that is close to vertical, and then refer to that curve as

Inelastic

A demand or supply curve with ___would be horizontal in appearance

Infinite elasticity

The ___ budget constraint shows the trade off between present and future consumption.

Intertemporal choice

Other things being equal, a ___ supply of workers tends to ___ real wages

Larger; decrease

A perfectly elastic supply curve is

Horizontal

If the demand curve is perfectly elastic, then an increase in supply will

Increase the quantity exchange but result in no change in the price

Improvements in the productivity of labor will tend to:

Increase wages

If the supply curve for a product is horizontal, then the elasticity of supply is:

Equal to infinity

The laws of supply functions in labor markets; that is, a higher ___ for labor leads to higher quantity of labor supplied

Price

In contrast to goods and services markets, ___ are rare in labor markets, because rules that prevent people from earning income are not politically popular

Price ceilings

During a severe recession, the government issued food stamps that can only be used to acquire food to families. The budget line graph shows food on the horizontal axis and everything else on the vertical axis. The government expects that issuing food stamps will cause each family budget constraint line to

Shift to the right

A more efficient means of processing algae to produce an anticancer drug is discovered. As a result, the supply curve for the drug will:

Shift to the right, decreasing the price of the drug

The term ___ refers to the additional utility provided by one additional unit of consumption

Marginal utility

As the ___ substitute for low-skill labor becomes available, the demand curve for low- skill labor will shift to the left

Technology

When consumers and business have greater confidence that they will be able to repay in the future,

The quantity demanded of financial capital at any given interest rate will shift to the right

Steel mill wage costs increase by 18% over a year. what is the likely economic effects on the market for steel?

There is an increase in the cost of producing steel, which shift the supply curve of steel to the left, thereby increasing the price of steel.

How do you Apple growers react to the news of medical research finding that suggests that eating apples leads to greater health benefits then were previously known?

They increase the quantity of apples supplied

Demand is said to be ___when the quantity demanded changes at the same proportion as the price

Unit elastic

Price elasticity of demand is defined as:

The percentage change in quantity demanded divided by the percentage change in price

Are markets always in equilibrium?

No, but if there is no outside interference, they tend to move toward equilibrium

Approximately what portion of annual consumption is typically spent by American households on shelter?

One-third

Suppose that Mimi plays golf five times per month when the price is $40 and four times per month when the price is $50. What is the price elasticity of Mimi's demand curve?

1.0

The demand for a product is unit elastic. At a price of $20, 10 units of a product are sold. If the Price is increased to $40, then one would expect sales to equal

Five units

Jay and Jen are married with two children. They are preparing a household budget for the coming year. Based on statistical information by American households, approximately what portion of the families annual consumption will most likely be budgeted for food and vehicle expenses

One-third

The price elasticity of demand measures the

Responsiveness of quantity demanded to a change in price

If the demand curve for a life-saving medicine is perfectly inelastic, then a reduction in supply will cause the equilibrium price to

Rise and the equilibrium quantity to stay the same

The ___ arises when the price changes because consumers have an incentive to consume less of the good with the relatively higher price and more of the good with the relatively lower price

Substitute effect

Economist are able to determine total utility by

Summing up the marginal utilities of each unit consumed

A 25% decrease in the price of breakfast cereals leads to a 20% increase in the quantity of cereal demanded, as a result

Total revenue will decrease