Economics

When the price is P2, producer surplus is

A+B+C.

Which arrow represents the flow of income payments?

D

A supply curve slopes upward because

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

Get Smart University is contemplating an increase in tuition to enhance revenue. If GSU feels that raising tuition would enhance revenue, it is

assuming that the demand for university education is inelastic.

When a buyer's willingness to pay for a good is equal to the price of the good, the

buyer is indifferent between buying the good and not buying it.

The movement from point A to point B on the graph is caused by a(n)

decrease in price.

A leftward shift of a supply curve is called a(n)

decrease in supply.

Which of the following would cause the demand curve to shift from Demand B to Demand A in the market for oranges in the United States?

decrease in the price of apples

The movement from Point A to Point B represents a(n)

decrease in the quantity supplied

Holding all other things constant, a higher price for ski lift tickets would

decrease the number of skis sold.

Suppose you like to make, from scratch, pies filled with banana cream and vanilla pudding. You notice that the price of bananas has increased. As a result, your demand for vanilla pudding would

decrease.

When the price falls from P2 to P1, producer surplus

decreases by an amount equal to A+B

Oil is used to produce gasoline. If the price of oil increases, consumer surplus in the gasoline market

decreases.

Good X and good Y are substitutes. If the price of good Y increases, then the

demand for good X will increase.

It is apparent from the figure that the

demand for the good conforms to the law of demand.

A table that shows the relationship between the price of a good and the quantity demanded of that good is called a

demand schedule.

If the number of buyers in a market decreases, then

demand will decrease.

When the price of peaches changes, the demand curve for peaches

does not shift because the price of peaches is measured on the vertical axis of the graph.

The demand for grape-flavored Hubba Bubba bubble gum is likely

elastic because there are many close substitutes for grape-flavored Hubba Bubb

Other things equal, the demand for a good tends to be more inelastic, the

fewer the available substitutes.

Economists make use of assumptions, some of which are unrealistic, for the purpose of

focusing their thinking.

A good will have a more elastic demand, the

greater the availability of close substitutes

To obtain the market demand curve for a product, sum the individual demand curves

horizontally.

If the price elasticity of supply is 1.2, and price increased by 5%, quantity supplied would

increase by 6%.

If suppliers expect the price of their product to fall in the future, then they will

increase supply now.

If the demand for textbooks is inelastic, then an increase in the price of textbooks will

increase total revenue of textbook sellers.

When there is a technological advance in the pork industry, consumer surplus in that market will

increase.

Consumer surplus

is the amount a consumer is willing to pay minus the amount the consumer actually pays.

A decrease in demand is represented by a

leftward shift of a demand curve.

The sum of all the individual supply curves for a product is called

market supply.

Which of the following is likely to have the most price inelastic demand?

prescription medicine

A demand schedule is a table that shows the relationship between

price and quantity demanded.

Other things equal, when the price of a good falls, the

quantity supplied of the good decreases.

Producer surplus directly measures

the well-being of sellers.

A seller's opportunity cost measures the

value of everything she must give up to produce a good.

When demand is perfectly inelastic, the demand curve will be

vertical, because buyers purchase the same amount as before whenever the price rises or falls.

The price elasticity of demand for mobile phones

will be lower if consumers perceive mobile phones to be a necessity.

If the price a consumer pays for a product is equal to a consumer's willingness to pay, then the consumer surplus relevant to that purchase is

zero.

Cameron visits a sporting goods store to buy a new set of golf clubs. He is willing to pay $750 for the clubs but buys them on sale for $575. Cameron's consumer surplus from the purchase is

$175.

If the equilibrium price is $350, what is the producer surplus?

$30,000

. If the equilibrium price is $200, what is the producer surplus?

$7,500

When the price of a bracelet was $28 each, the jewelry shop sold 128 per month. When it raised the price to $32 each, it sold 112 per month. Using the midpoint method, the price elasticity of demand for bracelets is

1

A bakery would be willing to supply 500 bagels per day at a price of $0.50 each. At a price of $0.80, the bakery would be willing to supply 1,100 bagels. Using the midpoint method, the price elasticity of supply for bagels is about

1.63.

At the equilibrium price, consumer surplus is (90 and 35)

1225

What is the opportunity cost to Picnicland of increasing the production of hotdogs from 450 to 900(Hot Dogs)? 975 and 450 (Burgers)

225 burgers

What is the opportunity cost to Picnicland of increasing the production of burgers from 450 to 750 (Hotdogs)? 1350 to 900 (Burgers)

450

Bob purchases a book for $6, and his consumer surplus is $2. How much is Bob willing to pay for the book?

8

Raymond buys a refrigerator for his new home. To which of the arrows does this transaction directly contribute?

A and B

Which area represents the increase in producer surplus when the price rises from P1 to P2?

AHGB

The only four consumers in a market have the following willingness to pay for a good: Carlos$15 Quilana$25 Wilbur$35

All three buyers experience the same loss of consumer surplus

Ming-la$45

All three buyers experience the same loss of consumer surplus.

Which of the following is a correct statement about production possibilities frontiers?

An economy can produce at any point on or inside the production possibilities frontier, but not outside the frontier.

Consider the production possibilities frontier for an economy that produces only sofas and cars. The opportunity cost of each car is

Both a and b are correct.

If the price of the product is $90, then who would be willing to purchase the product? Calvin $150.00 Sam $135.00 Andrew $120.00 Lori$100.00

Calvin, Sam, Andrew, and Lori

This economy has the ability to produce at which point(s)?

L, M, N, O, P

Which of the following events would increase producer surplus?

Sellers' costs stay the same and the price of the good increases.

A key determinant of the price elasticity of supply is the time period under consideration. Which of the following statements best explains this fact?

The number of firms in a market tends to be more variable over long periods of time than over short periods of time.

Using the midpoint method, the price elasticity of demand for a good is computed to be approximately 2. Which of the following events is consistent with a 0.1 percent increase in the price of the good?

The quantity of the good demanded decreases by 0.2 percent.

Suppose that two supply curves pass through the same point. One is steep, and the other is flat. Which of the following statements is correct?

The steeper supply curve represents a supply that is inelastic relative to the supply represented by the flatter supply curve.

If a consumer places a value of $15 on a particular good and if the price of the good is $17, then the

consumer does not purchase the good.

. Area C represents the

consumer surplus to new consumers who enter the market when the price falls from P2 to P1

Suppose the American Medical Association announces that men who shave their heads are less likely to die of heart failure. We could expect the current demand for

razors to increase.

A decrease in quantity supplied

results in a movement downward and to the left along a fixed supply curve.

A decrease in quantity demanded

results in a movement upward and to the left along a demand curve.

The price elasticity of supply measures how responsive

sellers are to a change in price

When quantity supplied increases at every possible price, we know that the supply curve has

shifted to the right.

The smaller the price elasticity of demand, the

smaller the responsiveness of quantity demanded to a change in price.

Efficiency means that

society is getting the maximum benefits from its scarce resources.

The production possibilities frontier is a graph that shows the various combinations of output that an economy can possibly produce given the available factors of production and

the available production technology.

Which of the following will cause a decrease in producer surplus?

the imposition of a binding price ceiling in the market

Kyle is planning to take a roadtrip. After he makes his plans, he has to make some unexpected auto repairs. Also, he sees the price of gas has gone up. Which of these two events should Kyle consider in deciding if it is still worthwhile to go on the trip?

the increase in the price of gas, but not the unexpected repairs

A rational decisionmaker takes an action if and only if

the marginal benefit of the action exceeds the marginal cost of the action.

The bowed shape of the production possibilities frontier can be explained by the fact that

the opportunity cost of one good in terms of the other depends on how much of each good the economy is producing.