Econ Study Guide test 1

A university student faces the difficult decision of how to spend one hour tonight. She could babysit herprofessor's child at an hourly wage of $6; she could work at the college library at a wage of $12; or she couldfinish her economics homework assignment. If she chooses to complete her homework assignment, she hasincurred an opportunity cost equal to:

$12

The price elasticity of demand measures the responsiveness of a change in

quantity demanded to a change in the price of a good.

When the price of big screen televisions decreases, the:

quantity supplied decreases

A friend comes up to you and offers you a free ticket to a Yankees game that night, and you decide to attend the game. The game takes five hours and costs you $25 for transportation. If you had not attended the game, you would have worked at your part-time job for $12 an hour. What is the cost to you of attending the game?

$85

Suppose the input costs associated with manufacturing office furniture increase over time. This would lead toa(n):

Decrease in the supply of furniture, higher prices, and a decrease in the equilibrium quantity.

If they spend all night writing poems, Leticia can write 10 poems, and Isabella can write 5. If they spend allnight making necklaces, Leticia can make 6, and Isabella can make 4. We know that:

Leticia's opportunity cost of writing poems is less than Isabella's

Consider the market for quinoa. What happens if there is an increased demand for quinoa cereal, while at the same time, a new quinoa seed that dramatically increases yield per acre becomes available?

The change in price is indeterminate; quantity increases

A shift of the supply curve for rutabagas occurs if there is

a change in the price of a good that is a substitute in production for rutabagas

Which factor is likely to cause an increase in the demand for online ordered pizza?

a larger population

Suppose that apples and pomegranates are substitutes in consumption. The _____ pomegranates will increase when apple prices rise

demand for

Over the past several years, sushi has become increasingly popular among consumers. This means that the_____ sushi has _____.

demand for; increased

In the market for canned soup, _____ will increase if income increases and soup is a(n) _____ good

demand; normal

Excess supply occurs when the

equilibrium price is below the current price

The problem of determining what goods and services society should produce

exists because there are not enough resources to provide all the goods and services that people want

Suppose the New York City housing market is in equilibrium. A recession causes local household incomes to decline. At the same time, construction of a series of new apartment buildings has just been completed. Given these two changes, and assuming that apartment housing is a normal good, we can predict that the price of apartments will _____, and the quantity of apartments bought and sold will _____

fall; rise or fall

You manage a restaurant, and lately revenues have been rather poor. One of your waiters suggests that raising food prices will increase revenues, but your chef suggests that decreasing food prices will increase revenues.You aren't sure who is right, but you know that your waiter believes that the demand for your food is _____, and your chef believes that the demand for your food is _____

inelastic; elastic

The production possibility frontier is bowed out because

the resources that are available are not equally suited for all types of production

If resources are scarce

they are insufficient to provide enough goods and services to satisfy all human material wants andneeds.

f the price of a good increases by 15%, and quantity demanded changes by 5%, then the price elasticity ofdemand is equal to:

approximately 0.33

Suppose a rise in the price of pears from $5.50 to $6.50 per basket at your local market causes you to decrease your purchases of pears from 12.5 baskets per month to 11.5 baskets per month. With this information, the price elasticity of demand for pears is:

0.5

The publisher of an accounting textbook finds that, when the book's price is lowered from $70 to $60, salesrise from 10,000 to 15,000. The price elasticity of demand, obtained using the midpoint method, is:

2.6

A technological improvement has been developed in the production of mangos. At the same time, scientistshave discovered that mangos have significant health benefits. This will result in:

an increase in the equilibrium quantity and an uncertain effect on the equilibrium price of mangos.

An announcement of a finding that vaping diminishes people's ability to think clearly will MOST likely result in:

b. a decrease in the demand for vapes.