Econ test #2

Hotdogs are inferior goods, how will an increase in income affect the hot dog demand

It will result in a decrease in hot dog demand

What is the dollar amount of tax per unit? (Based off #20)

$0.25

What is the price paid by consumers and the net price received by producers after tax is paid?

$0.25 & $0.25

If price decreases from $8 to $4 total consumer surplus will increase by what? (Chart)

$18

Apple problem with chart- Where is the maximum consumer surplus?

@4 apples

Minimum wage in market for fast food workers is likely to produce

A surplus of fast food workers

According to the law of diminishing marginal utility, which is true

Additional satisfaction received from consuming extra units of a good decreases as consumption of good increases

A 10% increase in price of good leads to a 25% decrease in quantity demanded of good, demand is...

Relatively elastic

If cross price elasticity of demand coefficient for two products is -0.8, then the products are...

Complements

After the government imposed a $0.20 per gallon tax on gas, the price of gas increased from $1 to $1.15. Which statement is true?

Consumers bear most, but not all, of the tax burden

What is one reason consumers increase quantity of a good they purchase when price of good decreases?

Consumers purchasing power increases

Total revenue is max when

Demand is unit elastic

The quantity of peanuts supplied increases from 40 tons per week to 60 tons per week when the price of peanuts increased from $4 per ton to $5 per ton. The price elasticity of supply for peanuts over this price range is

Elastic

a rise in the price of corn, a substitute good for potatoes will

Increase the demand for potatoes

Product x- market price is $20 and the total revenue is $50,000. The price changes to $30 and the total revenue increases to $80,000. What is the demand for the product?

Inelastic

Consumers consider popcorn and pretzels to be substitutes. A significant decrease in supply of popcorn will affect the pretzel market how?

It will increase the demand for pretzels and therefore the price of pretzels

Assume that the current market equilibrium price for milk is $2.80 and 5mil are sold. If the government places a price ceiling of $2.00, which of the following is true?

Less than 5 million gallons will be sold

Which would make the demand for a product more elastic?

New firms that produce similar products enter the industry

A change in price of lemons will do what to the demand

Not change

This diagram depicts demand and supply curves in city rental housing market. If a price ceiling is placed of $1,000, what will happen? (Chart)

Quantity of rental housing demanded will increase

An increase in the number of firms producing notebook computers will cause what to happen

Supply curve for notebook computers to shift to the right

If demand for a good is perfectly price inelastic in the short run and the supply curve is upward sloping, imposing a sales tax on the good will not change what?

The after-tax revenues received by suppliers

If the supply and demand of wheat increases, what will happen to equilibrium price and quantity of wheat?

The price will be indeterminate and the quantity will increase

A cold summer destroys a portion of the bee population. How will the equilibrium price and quantity of honey produced change l?

The price will increase and the quantity will decrease

Market demand curve for text messages for 3 buyers in market (has chart) Which combination lies on the market demand curve?

price= $0.16 & quantity=270 messages