Econ midterm

When a shortage exists in a market, sellers a. raise price, which increases quantity demanded and decreases quantity supplied until the shortage is eliminated. B. raise price, which decreases quantity demanded and increases quantity supplied until the shortage is eliminated. C. lower price, which increases quantity demanded and decreases quantity supplied until the shortage is eliminated. D. lower price, which decreases quantity demanded and increases quantity supplied until the shortage is eliminated.

B. raise price, which decreases quantity demanded and increases quantity supplied until the shortage is eliminated.

If the demand curve for a life-saving medicine is perfectly inelastic, then a reduction in supply will cause the equilibrium price to: A. rise and the equilibrium quantity to fall. B. rise and the equilibrium quantity to stay the same. C. rise and the equilibrium quantity to rise. D. stay the same and the equilibrium quantity to fall.

B. rise and the equilibrium quantity to stay the same.

If the supply of a product increases, then we would expect equilibrium price A. to increase and equilibrium quantity to decrease. B. to decrease and equilibrium quantity to increase c.and equilibrium quantity to both increase. d. and equilibrium quantity to both decrease.

B. to decrease and equilibrium quantity to increase

Which of the following might lead to an increase in the equilibrium price of jelly and a decrease in the equilibrium quantity of jelly sold? A. An increase in the price of peanut butter, a complement to jelly B. An increase in the price of Marshmallow Fluff, a substitute for jelly. C. An increase in the price of grapes, an input into jelly. D. An increase in consumers' incomes, as long as jelly is a normal good.

C. An increase in the price of grapes, an input into jelly.

Suppose that demand for a good decreases and, at the same ilmé, supply of the good decreases. What would happen in the market for the good? a. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. b.Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous. C. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. d. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

C. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.

Using the graph above and beginning on D1, a shift to D2 would indicate a(n): A. increase in quantity demanded. B. decrease in quantity demanded. C. increase in demand. D. decrease in demand.

C. Increase in demand

A key determinant of the price elasticity of supply is the A. number of close substitutes for the good in question. B. extent to which buyers alter their quantities demanded in response to changes in prices. C. length of the time period d. extent to which buyers alter their quantities demanded in response to changes in their incomes.

C. Length of the time period

What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to 1 produce steamed milk, wich is used to make lates, and scientists discovered that lattés cause heart attacks? A. Both the equilibrium price and quantity would increase. b. Both the equilibrium price and quantity would decrease. C. The equilibrium price would decrease, and the effect on equilibrium quantity would be ambiguous. d. The equilibrium quantity would decrease, and the effect on equilibrium price would be ambiguous.

C. The equilibrium price would decrease, and the effect on equilibrium quantity would be ambiguous.

The longer the time period considered, the more the elasticity of supply tends to: A. decrease B. remain constant C. increase D. converge to zero

C. increase

A surplus exists in a market if A. there is an excess demand for the good. B. quantity demanded exceeds quantity supplied. C. the current price is above its equilibrium price. d. All of the above are correct.

C. the current price is above its equilibrium price.

If a small change in price creates a large change in demand, then we would say that the Demand is a.Inelastic. b.stagnant. c.Perfectly elastic d.elastic.

D. Elastic

When demand decreases, what happens to price and quantity in equilibrium? A. Price increases and quantity decreases B. Price decreases and quantity increases C. Price and quantity both increase D. Price and quantity both decrease

D. Price and quantity both decrease

If the demand for a product is inelastic but the supply is elastic, the___will bear the tax incidence a.the producer b.the local government c.the federal government d.the consumer

D. The consumer

the key determinant of price elasticity of supply is

the time period

A supply curve slopes upward because A. as more is produced, total cost of production falls. B. an increase in input prices increases supply. C. the quantity supplied of most goods and services increases over time. D. an increase in price gives producers an incentive to supply a larger quantity.

D. an increase in price gives producers an incentive to supply a larger quantity.

When the price of a good increases the quantity demanded ____ (a)decreases B. increases c. stays the same d. None of the above

(a)decreases

A linear, downward sloping demand curve is: (a)|nelastic (b)Unit elastic (c)Elastic (d) Inelastic at some points and elastic at others

(d) Inelastic at some points and elastic at others

Suppose the price for an Lyft ride in Austin, TX decreases from $15 to $12 causing the quantity of rides demanded to increase from 1000 to 1600. Using the midpoint method, the price elasticity of demand for an Lyft ride is _____ a.3.0 b.0.50 c. 1.5 d.2.08

2.08 midpoint formula

2 Imagine that there are currently 10,000 students enrolled at your institution. The school decides to increase tuition and enrollment falls to 9000. Tuition started at 4,000 per semester but has since gone up to 4,8000. Calculate the price elasticity of demand using the midpoint formula.

=0.578

Refer to the figure below. A change from Point A to Point B represents a(n): A. increase in supply. B. decrease in supply. C. increase in quantity supplied. D. decrease in quantity supplied.

? I think increase

Andy views beer and pizza as complements to one another. If the price of pizza decreases, economists would expect: a. Andy's demand for pizza to increase. B. Andy's demand for pizza to decrease. C. Andy's quantity of pizza demanded to decrease.

?think increase but may be decrease

Consider the market for Starbucks coffee. what happens to the equilibrium price and quantity, when there is a decrease in the price of coffee beans and an increase in consumer income. Assume that coffee is a normal good. A. Equilibrium quantity increases and the effect on equilibrium price is ambiguous. B. Equilibrium price increases and the effect on equilibrium quantity is ambiguous. C. Equilibrium price decreases and the effect on equilibrium quantity is ambiguous. D. Equilibrium quantity decreases and the effect on equilibrium price is ambiguous.

I think a A. Equilibrium quantity increases and the effect on equilibrium price is ambiguous.

time period is the orly determirent of the frice elasticity of supply

Short run is Inelastic long run is elastic

If the cross-price elasticity of two goods is negative, then the two goods are A. necessities. B. complements. C. normal goods. D. inferior goods.

C. Complements

The price elasticity of demand measures how much A. quantity demanded responds to a change in price. B. quantity demanded responds to a change in income. c. price responds to a change in demand. d. demand responds to a change in supply.

A. quantity demanded responds to a change in price.

In a market, to find the total amount supplied at a particular price, we must A. sum the quantities that individual firms are willing and able to supply at that price. B. calculate the average of the quantities that individual firms are willing and able to supply at that price. C. sum the costs that individual firms incur to supply the product at that price. D. account for all determinants of demand.

A. sum the quantities that individual firms are willing and able to supply at that price.

The downward slope of the demand curve again illustrates the pattern that as ___ rises, _______decreases. a. quantity demanded, price B. quantity supplied, quantity demanded C. price, quantity demanded D. price, quantity supplied

C. price, quantity demanded

Increase in quantity demanded is cause by

Decrease in price

Equilibrium quantity must decrease when demand A. Increases and supply does not change, when demand does not change and supply decreases, and when both demand and supply decrease. B. increases and supply does not change, when demand does not change and supply increases, and when both demand and supply decrease. C. decreases and supply does not change, when demand does not change and supply increases, and when both demand and supply decreases. D. decreases and supply does not change, when demand does not Change and supply decreases, and when both demand and supply decrease.

D. decreases and supply does not change, when demand does not Change and supply decreases, and when both demand and supply decrease.

Closest substitutes, size of market, share of consumer budget

Effects price elasticity of demand

Which of the following events must cause equilibrium quantity to fall? A. demand increases and supply decreases B. demand and supply both decrease C. demand decreases and supply increases d. demand and supply both increase

B. demand and supply both decrease

At the equilibrium price, the quantity of the good that buyers are willing and able to buy A. is greater than the quantity that sellers are willing and able to sell. B. exactly equals the quantity that sellers are willing and able to sell. C. is less than the quantity that sellers are willing and able to sell. d. Either a) or c) could be correct.

B. exactly equals the quantity that sellers are willing and able to sell.

If the economy goes into a recession and incomes fall, what happens in the market for inferior good? a. Prices and quantities both rise b. Prices and quantities both fall c. Prices rise, quantities fall d. Prices fall, quantities fall.

a. Prices and quantities both rise

Assume that you are the owner of the only movie theater in a small town. From past experience, you have calculated that the price elasticity of demand for movie tickets varies with the age of the customer. At your current prices, senior citizens have a price elasticity of demand for movie tickets of 0.5, and teenagers have a price elasticity of demand of 2.0. To increase yoyr total revenue, you should a. Raise the ticket prices for senior citizens, but lower the ticket prices for teenagers. B. Raise the ticket prices for teenagers, but lower the ticket prices for senior citizens. C. Raise the ticket prices for both senior citizens and teenagers. D. Lower the ticket prices for both senior citizens and teenagers.

a. Raise the ticket prices for senior citizens, but lower the ticket prices for teenagers.

The price of a good rises from $8 to $12, and the quantity demanded falls from 110 to 90 units. Calculate the price elasticity of demand using the midpoint method (a) 1/5 b. 1/2 c. 2 d. 5

b. 1/2

Suppose researchers at the University of Wisconsin discover a new vitamin that increases the milk production of dairy cows. If the demand for milk is relatively inelastic, the discovery will a. raise both price and total revenues. b. lower both price and total revenues. C. raise price and lower total revenues. D. lower price and raise total revenues.

b. lower both price and total revenues.

A 10 percent increase in gasoline prices reduces gasoline consumption by about a. 6 percent after one year and 2.5 percent after five years. b.2.5 percent after one year and 6 percent after five years. C. 10 percent after one year and 20 percent after five years. D. 0 percent after one year and 1 percent after five years.

b.2.5 percent after one year and 6 percent after five years.

An increase in quantity supplied a. results in a movement downward and to the left along a fixed supply curve. b.results in a movement upward and to the right along a fixed supply curve. c. shifts the supply curve to the left. d. shifts the supply curve to the right.

b.results in a movement upward and to the right along a fixed supply curve.

Which scenario describes the market for oil in the short run in comparison to the long run? A. Scenario A describes both the short run and the long run. B. Scenario D describes both the short run and the long run. c. Scenario D describes the short run, whereas scenario A describes the long run. d. Scenario C describes the short run, whereas scenario B describes the long run.

c. Scenario D describes the short run, whereas scenario A describes the long run.

When her income increased from $10,000 to $20,000, Heather's consumption of macaroni decreased from 10 pounds to 5 pounds and her consumption of soy-burgers increased from 2 pounds to 4 pounds. We can conclude that for Heather, macaroni A. and soy-burgers are both normal goods with income elasticities equal to 1. B. is an inferior good and soy-burgers are normal goods; both have income elasticities of 1. c. cis an inferior good with an income elasticity of -1 and soy-burgers are normal goods with an income elasticity of 1. d. and soy-burgers are both inferior goods with income elasticities equal to

c. cis an inferior good with an income elasticity of -1 and soy-burgers are normal goods with an income elasticity of 1.

Taxes on goods with _____ demand curves will tend to raise more tax revenue for the government than taxes on goods with ______demand curves. a. elastic; unit elastic B. elastic; inelastic c. inelastic; elastic D. unit elastic; inelastic

c. inelastic; elastic

Some firms eventually experience problems with their capacity to produce output as their output levels increase. For these firms, a. market power is substantial. b. supply is perfectly inelastic. c. supply is more elastic at low levels of outout and less elastic at high levels of output. d. supply is less elastic at low levels of output and more elastic at high levels of output.

c. supply is more elastic at low levels of outout and less elastic at high levels of output.

tax incidence is higher on consumers when

consumers have no substitutes- when supply is more elastic than demand- answer:demand is inelastic supply is elastic

The demand for Godiva mint chocolates is likely quite elastic because a. there are many close substitutes. B. this particular type of chocolate is viewed as a luxury by many chocolatelovers. C. the market is narrowly defined. d. All of the above are correct.

d. All of the above are correct.

What happens to total revenue (TR) if the price decreases on a product with demand that is that price elastic a.Total revenue will fall. b. Total profit will remain the same. c.Profit will rise. d. Total revenue will rise

d. Total revenue will rise

The elasticity of supply is defined as the a.the percentage change in price divided by the percentage change in quantity supplied. b. the change in quantity supplied divided by price. c.the change in price divided by the quantity supplied d. the percentage change in quantity supplied divided by the percentage change in price

d. the percentage change in quantity supplied divided by the percentage change in price

Which of the following goods represent a cross-price elasticity likely greater than zero? a.The complementary goods of hot dog sausages and hot dog buns. b. The complementary goods of printers and printer ink. c.The substitute goods of soda and pizza. d.The substitute goods of blueberries and strawberries

d.The substitute goods of blueberries and strawberries

When a 10% increase in income causes a 4% increase in quantity demanded of a good a.the price elasticity of demand is .4 and the good is an inferior good. b.the income elasticity is 2.5 and the good is a normal good. c.the income elasticity is -2.5 and the good is a inferior good. d.the income elasticity is .4 and the good is a normal good.

d.the income elasticity is .4 and the good is a normal good.

Which of the following factors does NOT influence the price elasticity of demand of a product? a.share of the consumer budget b.the short run c.the long run d.the slope of the supply curve

d.the slope of the supply curve

inferior good = increase income= decrease demand

decrease income = incriase demand

how does elasticity affect potential revenue for a firm

if demand inelastic-increasing price will increase total revenue if its elastic-raising the price could decrease revenue

necessities have low income elasticity

if its over 1 its a luxury

what happens to the elasticity of demand as you move down the demand curve

it decreases in absolute value

after more employers allow employees to telecommute will the demand curve for cars be more elastic or inelastic

more elastic- until increase availability of substitutes

two goods have a negative cross price elasticity of demand. the goods are

negative- elastic (?)