ECON 201 Exam 1

ED= % change in QD/% change in price

% change in QD/% change in price

price elasticity of demand/supply equation

% change in quantity / % change in price

income elasticity of demand equation

% change in quantity demanded / % change in income

What cause shifts in supply

- the cost of manufacturing - exclusivity - cost of inputs - technology cost

The price of a good rises from $8 to $12, and the quantity demanded falls from 110 to 70 units. Calculated with the midpoint method, the elasticity is -8/11 -9/10 -11/8 -10/9

-10/9

Data collected from the economy of Royal City reveals that a 16% increase in income leads to the following changes: •A 6% increase in the quantity of horses demanded •A 14% decrease in the quantity of spades demanded •A 29% increase in the quantity of aces demanded Compute the income elasticity of demand for each good to complete the first column in the following table ( insert answers rounded to two decimals). Then, based on its income elasticity, indicate whether each good is a normal good or an inferior good ( insert Normal or Inferior). ( Hint: Be careful to keep track of the direction of change. The sign of the income elasticity of demand can be positive or negative, and the sign confers important information.) Good Income Elasticity of Demand Normal or Inferior Good Horses Spades Aces

0.38 normal -0.88 inferior 1.81 normal

The following graph shows two known points (X and Y) on a demand curve for tomatoes. Choose the response that correctly fills in the two blanks: According to the midpoint method, the price elasticity of demand for tomatoes between point X and point Y is approximately ______, which suggests that the demand for tomatoes is _______ between points X and Y. 0.63; inelastic 1.60; elastic 1.60; inelastic 0.63; elastic

0.63; inelastic

The following graph shows the market for laptops in 2008: Fill in the blanks with the correct choices: Between 2008 and 2009, the equilibrium price of laptops remained constant, but the equilibrium quantity of laptops increased. From this, you can conclude that between 2008 and 2009, the supply of laptops ____1____ and the demand for laptops ____2____. Suppose instead that between 2008 and 2009, the equilibrium quantity of laptops remained constant, but the equilibrium price increased. From this, you can conclude that between 2008 and 2009, the supply of laptops ____3____ and the demand for laptops ____4____. A. increased B. decreased C. was unchanged

1. A 2. A 3. B 4. A

Fill in the following blanks with the correct response: If a shortage exists in the car market, then the current price must be ___1___ than the equilibrium price. For the market to reach equilibrium, you would expect ___2___. If a surplus exists in the car market, then the current price must be ___3___ than the equilibrium price. For the market to reach equilibrium, you would expect ___4___. A. higher B. no different C. lower D. persistent excess demand E. persistent excess supply F. buyers to offer higher prices G. sellers to offer lower prices

1. C 2. F 3. A 4 G

Jake is a retired teacher who lives in New York City and does some consulting work for extra cash. At a wage of $50 per hour, he is willing to work 7 hours per week. At $65 per hour, he is willing to work 10 hours per week. Using the midpoint method, the elasticity of Jake's labor supply between the wages of $50 and $65 per hour is approximately _________ , which means that Jake's supply of labor over this wage range is _______ . Choose the response that correctly fills in the two blanks: 1.35; inelastic 0.74; elastic 0.74; inelastic 1.35; elastic

1.35; elastic

The government is considering levying a tax of $80 per unit on suppliers of either leather jackets or smartphones. The supply curve for each of these two goods is identical, as you can see on each of the following graphs. The demand for leather jackets is shown by DL(on the first graph), and the demand for smartphones is shown by Ds (on the second graph). Suppose the government taxes leather jackets. The following graph shows the annual supply and demand for this good. It also shows the supply curve (S + Tax) shifted up by the amount of the proposed tax ($80 per jacket). Complete the following table with the tax revenue collected and deadweight loss caused by each of the tax proposals. Note: All answers in the table should be integer values If the Government Taxes...Tax Revenue (Dollars)Deadweight Loss (Dollars) Leather jackets at $80 per jacket Smartphones at $80 per phone Suppose the government wants to tax the good that will generate more tax revenue at a lower welfare cost. In this case, it should tax _________________________(smartphones,leather jackets) because, all else held constant, taxing a good with a relatively___________ (more, less) elastic demand generates larger tax revenue and smaller deadweight loss.

12000 6000 20000 2000 smartphones less

The following graph represents the demand and supply for an imaginary good called a pinckney. The black point (plus symbol) indicates the pre-tax equilibrium. Suppose the government has just decided to impose a tax on this market; the grey points (star symbol) indicate the after-tax scenario. Fill in the following 3 blanks with the correct numerical response: Equilibrium quantity before tax: _______________ Per-unit tax: _____________ Price consumers pay after tax:________________ Fill in the blanks with the correct letters corresponding to the regions in the graph. Use commas between letters and arrange them in alphabetical order (eg. A, B or A, B, C). Consumer surplus after the tax is imposed:______________ Deadweight loss after the tax is imposed:___________________ Producer surplus after the tax is imposed:__________________

4 15 37.50 A C,E F

Suppose that during the past year, the price of a laptop computer fell from $2,500 to $2,300. During the same time period, consumer sales increased from 403,000 to 549,000 laptops. Calculate the elasticity of demand between these two price-quantity combinations by using the following steps. After each step, complete the relevant part of the table with the appropriate answers. (Note: For decreases in price or quantity, enter values in the Change column with a minus sign. The values in Original, New, Average, and Change columns will be integer value. The value in the Percent Change column should be a percentage rounded to two decimal places such as 20.25% or -20.25%) Step 1: Fill in the appropriate values for original quantity, new quantity, original price, and new price. Step 2: Calculate the average quantity by adding the original quantity and the new quantity, and then dividing by two. Do the same for the average price. Step 3: Calculate the change in quantity by subtracting the original quantity from the new quantity. Do the same for the change in price. Step 4: Calculate the percentage change in quantity demanded by dividing the change in quantity by the average quantity. Do the same to calculate the percentage change in price. Step 5: Calculate the price elasticity of demand by dividing the percentage change in quantity demanded by the percentage change in price, ignoring the negative sign. Original New Average Change Percent Change Quantity Price Using the midpoint method, the elasticity of demand for laptops is about ______________________( rounded to two decimal places)_______________________

403,000 549000 476000 146000 30.67 2,500 2,300 2400 -200 -8.33 3.68

Consider the market for mountain bikes. The first graph shows the demand and supply for mountain bikes before the government imposes any taxes. Suppose the government imposes an excise tax on mountain bikes. The black line on the second graph shows the tax wedge created by a tax of $60 per bike. Complete the following table by using the previous graphs to determine the values of consumer and producer surplus before the tax, and consumer surplus, producer surplus, tax revenue, and deadweight loss after the tax. Note: All answers should be integer values Before Tax (Dollars). After Tax (Dollars) Consumer Surplus Producer Surplus Tax Revenue Deadweight Loss

600 150 1800 450 0 1200 0 600

The following diagram shows supply and demand in the market for laptops. Fill in the following blanks with integer values: The equilibrium price is ______________________ The equilibrium quantity is ____________________ The consumer surplus is ____________________ The producer surplus is ____________________ The total surplus is ____________________

75 140 4200 4200 8400

Consider the market for pens that is represented by the following graph: Suppose that the number of students with an allergy to pencil erasers increases, causing more students to switch from pencils to pens in school. Moreover, the price of ink, an important input in pen production, has dropped considerably. Choose the correct pair of graphs that represent the changes in the supply and demand graphs. Note that Scenario 1 and Scenario 2 have the same directional shifts but with different magnitudes: A B C D

A

Lorenzo and Neha are farmers. Each one owns a 12-acre plot of land. The following table shows the amount of corn and rye each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing corn or rye or to produce corn on some of the land and rye on the rest. Corn (Bushels per acre) Rye (Bushels per acre) Lorenzo 40 8 Neha 28 7 A B C D

A

Suppose that business travelers and vacationers have the following demand for airline tickets from New York to Boston: Price Quantity Demanded (b. travelers) Quantity Demanded (vacationers) $150 2,100 tickets 1,000 tickets 200 2,000 800 250 1,900 600 300 1,800 400 As the price of tickets rises from $150 to $200, what is the price elasticity of demand for (Express answers as a reduced fraction):(i) business travelers [A], which is (elastic/inelastic) [B](ii) vacationers [C], which is (elastic/inelastic) [D] (iii) Since the elasticity for business travel is (more/less) [E] elastic than vacationers, we can conclude that business travel is (more/less) [F] essential than vacation travel.

A - -0.1707 B - inelastic C - -0.7778 D - inelastic E - less F - more

A recent study found that the demand and supply schedules for Frisbees are as follows: Price per Frisbee Quantity Demanded Quantity Supplied $11 1 million Frisbees 18 million Frisbees 10 2 15 9 3 12 8 4 9 7 6 6 6 10 3 a.) The equilibrium price of the frisbees is $[A] and the equilibrium quantity of the frisbees is $[B] _____________________________________________________________________________________________________________ b.) Frisbee manufacturers persuade the government that Frisbee production improves scientists' understanding of aerodynamics and thus is important for national security. A concerned Congress votes to impose a price floor $3 above the equilibrium price. The current price for frisbees is now $[C] and [D] frisbees are sold. _____________________________________________________________________________________________________________ c.) Irate college students march on Washington and demand a reduction in the price of Frisbees. An even more concerned Congress votes to repeal the price floor and impose a price ceiling $2 below the former price floor. The new market price is $[E]. The new number of frisbees sold is [F].

A - 7 B - 6 million C - 2 million D - 15 million E - 7 F - 6 million

Lorenzo and Neha are farmers. Each one owns a 12-acre plot of land. The following table shows the amount of corn and rye each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing corn or rye or to produce corn on some of the land and rye on the rest. Corn (Bushels per acre) Rye (Bushels per acre) Lorenzo 40 8 Neha 28 7 Using the PPFs from questions 2 and 3, select the correct responses for the following blanks: Because Lorenzo has a A opportunity cost of producing rye than Neha, B has a comparative advantage in the production of rye, and C has a comparative advantage in the production of corn. This also means that Lorenzo has a D opportunity cost of producing corn. A. higher B. lower C. Lorenzo D. Neha

A - A B - D C - C D - B

Compare the Scenario 1 and Scenario 2 graphs from the previous question. Shifting the supply and demand curves can cause changes to the equilibrium price and quantity. Some of these changes are definite, while some depend on the magnitudes of the shifts. Using your answer from the previous question, fill in the following table. Begin by indicating the overall change in the equilibrium price and quantity after the shift in demand or supply for each shift-magnitude scenario. Then, in the final column, indicate the resulting change in the equilibrium price and quantity when supply and demand shift in the direction you previously indicated on both graphs. If you cannot determine the answer without knowing the magnitude of the shifts, choose Cannot determine Change in Equilibrium Objects Equilibrium Object Scenario 1 Scenario 2 Shift Magnitudes Are Unknown Price A B C Quantity D E F A. Increases B. Decreases C. Cannot determine

A - B B - A C - C D - A E - A F - A

Utility

Ability or capacity of a good or service to be useful and give satisfaction to someone. gain

he following graph shows the market for hot dogs in Houston, where there are over 1,000 hot dog stands at any given moment. Suppose the price of hamburgers increases. (Assume that people regard hot dogs and hamburgers as substitutes.) Select the correct effect of this change on the market for hot dogs: A B C D

B

Consider the market supply of peanut butter. Choose whether each event will cause a movement along the supply curve for peanut butter or a shift of the supply curve for peanut butter, holding all else constant: Question A decrease in the number of producers A decrease in the price of peanut butter A change in expectations about the future price of peanut butter An increase in the cost of peanuts to the peanut butter producers A. Movement Along B. Shift

B A B B

Consider the market demand for peanut butter. Choose whether each option will cause a movement along the demand curve (change in Quantity Demanded) for peanut butter or a shift of the demand curve for peanut butter, holding all else constant: Question A change in the expectations of consumers about prices A decrease in the price of hazelnut spread (a substitute for peanut butter) An increase in the price of peanut butter There is a tax cut that results in consumers having higher take home income A. Movement Along B. Shift

B B A B

For each of the regions, use the midpoint method to identify whether the supply of this good is elastic or inelastic. Choose the correct response: Between W and X is inelastic; Between Y and Z is elastic Between W and X is inelastic; Between Y and Z is inelastic Between W and X is elastic; Between Y and Z is inelastic Between W and X is elastic; Between Y and Z is elastic

Between W and X is elastic; Between Y and Z is inelastic

The following graph displays four supply curves (HH, II, JJ, KK) that intersect at point A. Using the graph, choose the statements that are true: Between points A and C, curve KK is inelastic. Between points A and B, curve II is perfectly inelastic. Curve KK is more elastic between points A and C than curve JJ is between points A and D. Between points A and E, curve HH is perfectly inelastic.

Between points A and C, curve KK is inelastic. Between points A and B, curve II is perfectly inelastic.

The following graph displays four demand curves (LL, MM, NN, and OO) that intersect at point A. Using the graph, choose the statements that are true: Between points A and C, curve MM is inelastic. Between points A and B, curve LL is perfectly inelastic. Curve MM is less elastic between points A and C than curve NN is between points A and D. Between points A and E, curve OO is perfectly inelastic.

Between points A and E, curve OO is perfectly inelastic.

Lorenzo and Neha are farmers. Each one owns a 12-acre plot of land. The following table shows the amount of corn and rye each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing corn or rye or to produce corn on some of the land and rye on the rest. Corn (Bushels per acre) Rye (Bushels per acre) Lorenzo 40 8 Neha 28 7 A B C D

C

Which of the following should be used to determine specialization? Absolute Advantage Comparative Advantage Efficiency Desire

Comparative Advantage

The following graph shows the market for hot dogs in Houston, where there are over 1,000 hot dog stands at any given moment. Suppose an innovation in meat processing technology makes it possible to produce more hot dogs at a lower cost than ever before. Answers: A B C D

D

Select the correct definitions for the demand terms: Question The claim that, with other things being held equal, the quantity demanded of a good falls when the price of that good rises. A graphical object showing the relationship between the price of a good and the amount of the good that buyers are willing and able to purchase at various prices. The amount of a good that buyers are willing and able to purchase at a given price. A table showing the relationship between the price of a good and the amount that buyers are willing and able to purchase at various prices A. Quantity Demanded B. Demand Curve C. Demand Schedule D. Law of Demand

D B A C

Choose the correct supply term for each definition: Question The claim that, other things being equal, the quantity supplied of a good increases when the price of that good rises. A table showing the relationship between the price of a good and the amount of it that sellers are willing and able to supply at various prices. A graphical object showing the relationship between the price of a good and the amount that sellers are willing and able to supply at various prices. The amount of a good that sellers are willing and able to supply at a given price All Answer Choices A. Quantity Supplied B. Supply Curve C. Supply Schedule D. Law of Supply

D C B A

If Donovia has a comparative advantage over Atropia in producing phones rather than computers, which of the following is true? Atropia gives up less computers than Donovia for every phone they produce Donovia gives up less computers than Atropoia for every phone they produce Atropia can produce more computers than Donovia in a given amount of time.. Donovia can produce more phones than Atropia in a given amount of time.

Donovia gives up less computers than Atropoia for every phone they produce

complement

E < 0

Suppose that, in a competitive market without government regulations, the equilibrium price of gasoline is $3.00 per gallon. Complete the following table by indicating whether each of the statements is an example of a price ceiling or a price floor and whether it is binding or nonbinding. Note: Answers in the Price Control column will be either "Price floor" or "Price ceiling". Answers in the Binding column are "Yes" or "No". Statement Price Control Binding? The government prohibits gas stations from selling gasoline for more than $3.40 per gallon. There are many teenagers who would like to work at gas stations,but they are not hired due to minimum-wage laws. The government has instituted a legal minimum price of $2.50 per gallon for gasoline.

Price ceiling No Price floor Yes Price floor No

Budget Constraint Equation

PxX + PyY = I (Px = price of X, X = quantity of X consumed, Py = price of Y, Y = quantity of Y consumed, I = household income)

Solve Equilibrium Price and Quantity for the following market: Q*= P*=

Q*= 13200 P*= 7600

shortage

Qd > Qs

surplus

Qs > Qd

Equilibrium

Qs=Qd

Law of Supply

Tendency of suppliers to offer more of a good at a higher price price - increase quantity supply - increase price - decrease quantity supply - decrease

Rent controls force landlords to price apartments below the equilibrium price level. An immediate effect is a shortage (excess demand) of apartments, because the quantity of apartments demanded is greater than the quantity supplied at the regulated price. When cities prevent landlords from charging market rents, which of the following are common long-run outcomes? Check all that apply The future supply of rental housing units increases. The quantity of available rental housing units falls. The quality of rental housing units falls. Nonprice methods of rationing emerge.

The quantity of available rental housing units falls. The quality of rental housing units falls. Nonprice methods of rationing emerge.

Which of the following best describes economics? The study of how society distributes scarce resources. The study of how financial markets interact. The study of money. The study of business.

The study of how society distributes scarce resources

Which of the following will result in an increase in supply for airplanes? limate change activists lobbying for stricter emissions taxes The technological advancement that allows for relevant materials to be produced cheaply The increase in ticket prices for domestic flights More consumers demanding a product

The technological advancement that allows for relevant materials to be produced cheaply

inelastic goods

Very little change in demand for large changes in price

The graph represents the supply and demand for CDs Choose the correct answer for each blank: Because you understand the law of demand, you can deduce that the correct graphical representation of the demand for CDs must be _____. Because you understand the law of supply, you can deduce that the correct graphical representation of the supply for CDs must be ______. In terms of demand, at a price of $10 per CD, the _______ is five million CDs. In terms of supply, at a price of $10 per CD, the _______ is five million CDs. a.A b.B c.demand curve d. quantity demanded e.demand schedule f.supply curve g.quantity supplied h.supply schedule

a b d g

The following table shows the weekly demand and supply in the market for ice cream in New York City. Price. Quantity Demand Quantity Supplied 4 2,000 200 8 1,600 600 12 1,200 800 16 800 1,200 20 400 1,800 *Note: This market schedule does not include every price intentionally. You will have to do a little bit of deduction Find the equilibrium price and quantity by plotting the supply and demand curves from the information in the table. A graph such as this will help you: The equilibrium price is $[a] (integer value), and the equilibrium quantity is [b] (integer value) gallons of ice cream.

a - 14 b - 1000

demand shift

a change in the amount buyers want to purchase at a given price

demand curve

a graph of the relationship between the price of a good and the quantity demanded

price ceiling

a maximum price that can be legally charged for a good or service

income elasticity of demand

a measure of how much the quantity demanded of a good responds to a change in consumers' income

price floor

a minimum price for a good or service

dead weight loss

a portion of the market where we lose market activity

elastic

a small change in price produces a large change in demand

Jake is a hard-working college sophomore. One Saturday, he decides to work nonstop until he has answered 100 practice problems for his math course. He starts work at 8:00 AM and uses a table to keep track of his progress throughout the day. He notices that as he gets tired, it takes him longer to solve each problem. Time Total Problems Answered 8:00 AM09:00 AM4010:00 AM7011:00 AM90Noon100 Use the table to help answer the following question. TimesMarginal Gain8:00 - 9:00 9:00 - 10:00 10:00 - 11:00 11:00 - Noon Later, the teaching assistant in Jake's math course gives him some advice. "Based on past experience," the teaching assistant says, "working on 15 problems raises a student's exam score by about the same amount as reading the textbook for 1 hour." For simplicity, assume students always cover the same number of pages during each hour they spend reading. Given this information, in order to use his 4 hours of study time to get the best exam score possible, how many hours should he have spent working on problems, and how many should he have spent reading? a. 3 hours working on problems, 1 hour reading b. 1 hour working on problems, 3 hours reading c. 2 hours working on problems, 2 hours reading d. 4 hours working on problems, 0 hours reading

a. 3 hours working on problems, 1 hour reading

marginal utility

an additional amount of satisfaction

normal

anything you want to buy more Ei > 0

You work as an assistant coach on the university basketball team and earn $15 per hour. One day, you decide to skip the hour-long practice and go to the county fair instead, which has an admission fee of $9. The total cost (valued in dollars) of skipping practice and going to the fair (including the opportunity cost of time) is _________. b. 24 c. 6 d. 15

b. 24

Veblen Good

breaks law of demand as price goes up demand goes up - lux goods

Inferior

buy in necessity Ei < 0

Suppose South Africa produces two types of goods: agricultural and capital. The following diagram shows its current production possibilities frontier for corn, an agricultural good, and construction vehicles, a capital good. Select the correct effect upon the PPF if there is a breakout of avian flu that sickens millions of workers. a. PPF shifts outward, increasing the potential for Corn and Construction Vehicle Production. b. Decrease in possible Corn Production, no change in Construction Vehicles Production. c. PPF shifts inward, decreasing the potential Corn and Construction Vehicle Production. d. Decrease in possible Construction Vehicle Production, no change in Corn Production.

c. PPF shifts inward, decreasing the potential Corn and Construction Vehicle Production.

MU=

change of total utility/ change in quantity

Law of Demand

consumers buy more of a good when its price decreases and less when its price increases

consumer surplus

difference between what the costumer is willing to pay compare to actual pay CS=WTP -Pd

PPF - on the curve

efficient

| Ed | > 1

elastic

A point inside the production possibilities frontier efficient, but not feasible. neither efficient nor feasible feasible, but not efficient. both efficient and feasible

feasible, but not efficient.

price elasticity of demand/supply

how much the demand/supply and how the price responds

Economics is best defined as: how to run a business most profitably how society manages its scarce resources how to predict inflation, unemployment, and stock prices how the government can stop the harm from unchecked self-interest

how society manages its scarce resources

PPF inside the curve

inefficient

| Ed | < 1

inelastic

Consider some determinants of the price elasticity of demand: •The availability of close substitutes •Whether the good is a necessity or a luxury •How broadly you define the market •The time horizon being considered A good without any close substitutes is likely to have relatively (elastic, ____________________ inelastic) demand, since consumers cannot easily switch to a substitute good if the price of the good rises. A good's price elasticity of demand depends in part on how necessary it is relative to other goods. If the following goods are priced approximately the same, which one has the least elastic demand? (a,b) _______________________________________ A: Diamond necklace; B: A heart valve for heart attack victims The price elasticity of demand for a good also depends on how you define the good. Organize the goods found in the following table by indicating which is likely to have the most elastic demand, which is likely to have the least elastic demand, and which will have demand that falls in between. Answer with "Most Elastic","In Between", or "Least Elastic" Red bell peppers _____________________ Food ______________________ Vegetables _______________________ The price elasticity of demand is also affected by the given time horizon. Compared to the short-run demand for oil, the demand for oil in the long run will tend to be ( more, less) elastic. ____________________________________________________

inelastic, b most elastic, least elastic, in between, more

unit elastic

matched up

shift

not on graph but changes it

Producer's Surplus

price producer receives - what they are willing to sell for Ps=Pd-WTS

PPF

production possibilities frontier

if the demand was decrease

push the left

if the demand was increasing

push to the right

Elasticity

responsiveness of some sort of price change (quantity demand) how responsive to things of price

Juanita is deciding whether to buy a suit that she wants, as well as where to buy it. Three stores carry the same suit, but it is more convenient for Juanita to get to some stores than others. For example, she can go to her local store, located 15 minutes away from where she works, and pay a marked-up price of $114 for the suit: Store Travel Time Each Way (Minutes) Price of a Suit (Dollars Per Suit) Local Department Store. 15. 114 Across Town 30 86 Neighboring City 60 60 Juanita makes $30 an hour at work. She has to take time off work to purchase her suit, so each hour away from work costs her $30 in lost income. Assume that returning to work takes Juanita the same amount of time as getting to a store and that it takes her 30 minutes to shop. As you answer the following questions, ignore the cost of gasoline and depreciation of her car when traveling. You should use a table such as this to compute the opportunity costs for each location. Store Opportunity Cost of Time Price of a Suit Total Cost Local Department Store 114 Across Town 86 Neighboring City 60 Assume that Juanita takes opportunity costs and the price of the suit into consideration when she shops. Juanita will minimize the cost of the suit if she buys it from the _________. a. local department store b. store across town c. store in the neighboring city d. a. and b.

store across town

Giffen good

technique inferior but when price goes up demand goes up - necessary

comparative advantage

the ability to produce a good at a lower opportunity cost than another producer

Quality supplied

the amount that a supplier is willing and able to supply at a specific price price increase = quantity supply increase not supply increase

demand

the desire to own something and the ability to pay for it

Disutility

the dissatisfaction one receives from a bad

budget constraint

the limited amount of income available to consumers to spend on goods and services

law of diminish marginal utility

the marginal utility of a good declines as more of it is consumed in a given time period

opportunity cost

the most desirable alternative given up as the result of a decision

Inelastic

the percentage change in quantity is less than the percentage change in price (E<1)

A change in which of the following will NOT shift the demand curve for hamburgers? he price of hot dogs (a known substitute) the price of hamburger buns (a known complement) the income of hamburger consumers the price of hamburgers

the price of hamburgers

Macroeconomics

the study of economy-wide phenomena, including inflation, unemployment, and economic growth

Microeconomics is best defined as the study of how individuals, households, and firms make decisions and how they interact in markets. the study of economy-wide phenomena, including inflation, unemployment, and economic growth claims that attempt to prescribe how the world should be. claims that attempt to describe the world as it is.we

the study of how individuals, households, and firms make decisions and how they interact in markets.

Your opportunity cost of going to a movie is zero, as long as you enjoy the movie and consider it a worthwhile use of time and money. the total cash expenditure needed to go to the movie plus the value of your time. the price of the ticket plus the cost of ant soda and popcorn you buy at the theater. the price of the ticket.

the total cash expenditure needed to go to the movie plus the value of your time.

total utility

the total satisfaction one gets from consuming a product - sum of marginal utility sigma MU

supply

the willingness and ability of producers to offer a good or service for sale price goes up quality supply goes up

PPF outside the curve

unattainable

| Ed | = 1

unit elastic

movement along

what changes on the graph

Lorenzo and Neha are farmers. Each one owns a 12-acre plot of land. The following table shows the amount of corn and rye each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing corn or rye or to produce corn on some of the land and rye on the rest. Corn (Bushels per acre) Rye (Bushels per acre) Lorenzo 40 8 Neha 28 7 Using the PPFs from questions 2 and 3, fill in the blanks in the correct order: Loranzo's opportunity cost of producing 1 bushel of rye is [x] bushels of corn, whereas Neha's opportunity cost of producing 1 bushel of rye is [y] bushels of corn.

x= 5 y= 4