Econ Test 1
Suppose that Mimi plays golf 5 times per month when the price is $40 and 4 times per month when the price is $50. What is the price elasticity of Mimi's demand curve?
1
Suppose that Bobo purchases 1 pizza per month when the price is $19 and 3 pizzas per month when the price is $15. What is the price elasticity of Bobo's demand curve?
4.25
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:
5 units
are enacted when discontented sellers, feeling that prices are too low, appeal to legislators to keep prices from falling.
Price floors
change in price of a good or service typically causes ___________________________ for that specific good or service.
a change along the supply curve
ceteris paribus
all variables except those specified are constant
The nature of demand indicates that as the price of a good increases:
buyers decide to purchase less (demand decreases)
A price cut will increase the total revenue a firm receives if the demand for its product is:
elastic
Youth smoking seems to be more __________ than adult smoking—that is, the quantity of youth smoking will fall by a greater percentage than the quantity of adult smoking in response to a given percentage increase in price.
elastic
The ____________ is the quantity where quantity demanded and quantity supplied are equal at a certain price
equilibrium quantity
If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. This is known as
excess demand
If the demand curve is perfectly elastic, then an increase in supply will:
increase the quantity exchanged but result in no change in the price
demand schedule for a good
indicates the quantities that will be purchased at alternative market prices
Economists refer to the relationship that a higher price leads to a lower quantity demanded as the
law of demand
The elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in
price
The downward slope of the demand curve again illustrates the pattern that as _____________ rises, _________________ decreases.
price, quantity demand
A demand curve shows the relationship between price and _________________ on a graph
quantity demanded
refers to the total number of units purchased at a price
quantity demanded
refers to the total number of units that are purchased at that price
quantity demanded
When economists talk about supply, they are referring to a relationship between price received for each unit sold and the
quantity supplied
price elasticity demand measures
responsiveness of quantity demanded to a change in price
If new manufacturers enter the computer industry, then (ceteris paribus)
supply curve shifts to the right
Price elasticity of demand is defined as
the percentage change in quantity demanded divided by the percentage change in price.
scarcity exists because of
unlimited wants and limited resources
unit elastic demand
when the quantity demanded changes at the same proportion as the price
normative statement
where philosophers draw distinction between positive statements
