micro final sg pt 2

The figure shows the market for 2-bedroom townhomes in San Diego. If a rent ceiling is set at​ $1,000 per​ month, what is​ true? graph e

Black market rents might be as high as​ $1,300 per month.

11. Refer to the Figure below. As price falls from PA to PB, the quantity demanded increases most along D1; therefore, graph r

D1 is more elastic than D2 or D3.

Elton decides to open a restaurant. His expenses at the end of the first year are: $18,000 rent, $20,000 for food and other supplies, $10,000 for his waiters. His revenue was $65,000. Before opening the restaurant Elton was a telephone repairman earning $40,000 annually. He also had $10,000 in the bank that was earning 5 percent interest per annum. He withdrew this to start the business. Which of the following statements is true?

Elton's economic profit is -$23,500.

John has a marginal benefit of $7 for 1 slice of pizza, $5 for a second slice, $3 for a third slice, $1 for a fourth slice, and $0.50 for a fifth slice. The price of pizza is $1.50 per slice. Which of the following statements is correct?

John will purchase 3 slices of pizza and have consumer surplus of $10.50.

You have a part-time job teaching voice and piano lessons to young students at your music studio. You currently charge $20/lesson and have 30 students. Suppose instead that when you raise your price of $25/lesson, you end up with only 20 students. How much revenue will you gain now? What can you conclude about the Price Elasticity of Demand?

P1 = $20 and Q1= 30; TR = $20 x 30 = $600 P2 = $25 and Q2 = 20; And TR = $25 x 20 = $500 Since TR dropped when you raise your price, therefore we can conclude that the demand in this case is a relatively elastic demand. /// Your new revenue would be $500 (because 25x20=500). The revenue test states that is the price increases but the revenue decreases, the demand is elastic. The Price Elasticity of Demand states that when demand is elastic the Price Elasticity of Demand is greater than 1.

If a 8 percent increase in income results in a 20 percent increase in the quantity demanded of restaurant meals, what is the income elasticity of demand for restaurant meals, and what type of good is restaurant meals?

Positive 2.5, and therefore restaurant meals is a normal good.

Based on your answer above, what has happened to the equilibrium price of new cars?

Price has increased.

Which of the following statements correctly defines producer surplus?

Producer surplus is the area *above the market supply curve and below the market price up to the quantity that is sold in the market.*

Which of the following goods is likely to have the highest price elasticity of​ demand? a. Sugar b. a caffeinated drink c. Starbucks Latte d. non-alcoholic drink

Starbucks Latte

An increase in input costs in the production of electric automobiles caused the price of electric automobiles to rise. Holding everything else constant, how would this affect the marketfor gasoline powered automobiles (a substitute in consumption for electric − automobiles)?

The demand for gasoline powered automobiles would increase and the equilibrium price ofgasoline powered automobiles would increase.

Which of the following correctly comments on the following statement? "The only way to increase the revenue from selling a product is to increase the product's price."

This statement is not true. Revenue will increase as the price of the product increases only if demand is inelastic.

The figure shows the market for finish carpenters in Bozeman. If there is a minimum wage set at​ $18, which of the following statements is​ true? same as graph g

Workers who retain their jobs have their wages rise.

Suppose you have surveyed a few industries and obtained information about the income elasticity of demand for their products. If you expect that the economy is headed for a long recession, you would advise people to look for jobs in an industry with

a "high" negative income elasticity coefficient such as − 4.

Consider the following four goods: 1) a laptop, 2) a beach condo, 3) a piece of gum, and 4) a new pool. Rank the demand of these four goods by their expected price elasticities of demand from most elastic to least elastic.

a beach condo, a new pool, a laptop and a piece of gum

Relative to a perfectly competitive market, a monopoly results in

a gain in producer surplus less than the loss in consumer surplus.

If Microsoft wanted to prove to the Justice Department that its Windows software has many substitutes that personal computer owners can use, Microsoft hopes to find

a large positive value for the cross elasticity of Windows and other software.

People eat at restaurants less often when their incomes fall because of the recession. Eating at restaurants must be

a normal good.

Consider the labor market from the previous question. Suppose that the government imposes an hourly min wage of $10. a. How much unemployment is generate by this minimum wage? b. Identify the amount of consumer surplus that is generated by this market after the imposition of this min wage. (Identify the area/s that demonstrates the CS and compute the CS.) c. Identify the amount of producer surplus that is generated by this market after the imposition of this min wage. (Identify the area/s that demonstrates the PS and compute the PS.) d. Identify the amount of total surplus that is generated by this market after the imposition of this min wage. (Identify the area/s that demonstrates the TS and compute the TS.) e. Identify the amount of deadweight loss associated with this min wage. (Identify the area/s that demonstrates the DWL and compute the DWL.) graph q

a. There is 1500 unemployed indiviudals generated by minimum wage (because 2000-500=1500). b. The consumer surplus is represented by the area of triangle A. The consumer surplus is $250 (because 1/2(11-10)x500=250). c. The producer surplus is the area of rectangle B and triangle C. The producer surplus is 3500 (because (10-4)+(10-2)/2 x500=3500). d. The total surplus is the area of triangle A, rectangle B, and triangle C. The total surplus is 3750 (because 250+3500=3750). e. Deadweight loss is represented by the area of triangle D. The deadweight loss is 3000 (because 1/2(1000x6)=3000).

In the United States, it is often said that the gasoline market is highly competitive. It is not perfectly competitive, but it has features and results that are similar to those of a perfectly competitive market, such as ________. an individual buyer cannot influence the market price of gasoline by himself b. all of the above c. an individual gas station cannot influence the market price by itself d. gas stations located near each other tend to charge the same or very similar prices

all of the above

To maintain a monopoly, a firm must have

an insurmountable barrier to entry.

refer to the graph below; What does the vertical difference between curves F and G measure? graph v

average fixed costs.

If you burn your trash in the backyard in spite of regulations against it, then you are

avoiding the private costs associated with disposing your trash some other way and creating a social cost

Which of the following describes how a negative externality affects a competitive market?

b. The externality causes a difference between the private cost of production and the social cost.

Alternative approaches for reducing carbon dioxide emissions are

carbon taxes and carbon trading.

Which of the following products comes closest to having a perfectly price inelastic​ demand? gasoline bus rides iPhones Chemotherapy

chemo

Average fixed costs for a firm are​ ________.

decreasing as the level of output increases

Which of the following goods is likely to have an income elasticity of demand greater than one? Gasoline b. Diamond jewelry c. Bread d. Salt

diamond jewlery

Efficiency in competitive markets is characterized by ________.

every buyer whose willingness to pay is greater than or equal to marginal cost is served in the market

Refer to Figure above. If the price is $180, graph s

here is a surplus of 120 units.

In the figure above, the equilibrium market price is $20. $20 is the graph j

marginal cost of 150th unit.

The income elasticity of demand for electricity is 1.90. Suppose the economy improves and incomes are expected to increase by 10 percent. This means that

power companies can expect to sell 19 percent more electricity.

The table below lists the marginal cost of cowboy hats by The Waco Kid, a firm that specializes in producing western wear. If the market price of The Waco Kid's cowboy hats is $40, table b

producer surplus will equal $28.

The table below lists the marginal cost of cowboy hats by The Waco Kid, a firm that specializes in producing western wear. If the price of cowboy hats increases from $38 to $46, same as table b

producer surplus will rise from $22 to $46.

If a 35 percent increase in price of golf balls led to a 42 percent decrease in quantity demanded, then the demand for golf balls is

relatively elastic.

When buyers and sellers optimize in a perfectly competitive market, ________.

social surplus is maximized

The negative value of the price elasticity of demand for a good can be attributed to ________.

the Law of Demand

When a market is not in equilibrium:

the economic motives of sellers and buyers will move the market to its equilibrium

Refer to Figure below. What does S2 represent? graph g2

the market supply curve that reflects social cost

The entry and exit of firms in a perfectly competitive market is mostly dependent on​ ________.

the profitability of the existing firms

The figure to the right represents the market for pecans. Assume that this is a competitive market. If the price of pecans is $3, graph n

the quantity supplied is less than the economically efficient quantity.

The following graph represents the total production of a firm on the y-axis, and the number of employees on the x-axis. Refer to the figure above. Specialization begins to occur when the ________. graph u

the second worker is hired

The primary goal of a seller is to ________.

maximize profits

When a negative externality exists, the private market produces

more than the economically efficient output level.

In order to be​ binding, a price ceiling

must lie below the free market equilibrium price.

If, in a perfectly competitive ​industry, the market price facing a firm is above its average total cost at the output where marginal revenue equals marginal​ cost, then

new firms are attracted to the industry.

In free markets, if prices are changing, then we know:

quantities demanded are not equal to quantities supplied.

Refer to the figure below; (graph a) If the price is $10, then there is a:

surplus of 15 units.

Economic cost of production differs from accounting costs in that

economic cost adds the non-monetary, indirect costs of a firm using its own resources while accounting cost does not.

The table to the right shows the demand and supply schedules for the labor market in the city of Pixley. If a minimum wage of​ $11.50 is mandated there will be a same as table a

surplus of​ 40,000 units of labor.

The marginal product of labor is defined as

the additional output that results when one more worker is​ hired, holding all other resources constant.

If the market price is $25, the average revenue of selling five units is

$25

Which of the following statements best describes the concept of consumer surplus?

"I was all ready to pay $300 for a new leather jacket that I had seen in Macy's but I ended up paying only $180 for the same jacket."

Suppose you own a BBQ sandwich place. Your revenue is $200/day and your operating costs are $100/day. If you could make $100/day bartending for someone else, then economic profits of your BBQ place are $________ and your accounting profits are $________

$0; and $100

In the figure below, for the 3,000th unit, the maximum price a consumer is willing to pay is graph h

$10

Refer to the Figure below. What is the amount of its total fixed cost? graph z

$2,520

The weekly quantity demanded of frozen pizzas in Decorah, IA as a function of price is shown in the graph below. The market price of frozen pizzas is $10, and at that price 600 pizzas are sold. Consumer surplus in this market is ________. graph k

$4,500

Refer to the figure below. When output level is 100, what is the total cost of production? graph w

2k

Refer to Figure below. What is the difference between the monopoly output and the perfectly competitive output? graph e2

340 units

A research shows that the absolute value of the price elasticity of demand for beers is - 0.5. What does this mean?

A 1 percent increase in the price of beers causes quantity demanded to decrease by 0.5 percent.

Suppose the value of the price elasticity of demand is -3. What does this mean?

A 1 percent increase in the price of the good causes quantity demanded to decrease by 3 percent.

Which of the following pairs of goods is most likely to have a positive cross − price elasticity?

A privately − owned car and public transportation

How has the microchip shortage affected the used car market?

A shift in demand to the right.

How has the microchip shortage affected the new car market?

A shift in supply to the left.

Which of the following statements is correct?

An increase in price decreases consumer surplus.

Which of the following is an example of a long-run adjustment? a. Your favorite restaurant is now open on Sundays. b. A soybean farmer turns on the irrigation system after a month-long dry spell. c. Tesla Gigafactory in China hire 2,000 assembly line workers. d. Barnes-Jewish Hospital builds a new hospital building.

Barnes-Jewish Hospital builds a new hospital building.

Why do economists study perfectly competitive markets even though​ few, if​ any, markets in the real world are perfectly​ competitive?

Because the perfectly competitive market is a good approximation to many markets in the real world and helps us understand how real markets work.

Why is consumer surplus difficult to measure in real life?

Consumer surplus represents the amount between the price a consumer pays and what a consumer is willing to pay. For example, if you buy shoes for $40 but you were willing to spend $60, then your consumer surplus would be $20. Although, it is difficult to measure consumer surplus in real life because businesses have a difficult time measuring how much a consumer is willing to spend on a good and/or service.

Mohamed lives in a small town where there is only one Sea Food restaurant. Which of the following is likely to be true about the price elasticity of demand for meals at this restaurant?

Demand is likely to be relatively inelastic.

Which of the following statements about the price elasticity of demand is ​correct? a. The absolute value of the elasticity of demand ranges from zero to one. b. The elasticity of demand for a good in general is equal to the elasticity of demand for a specific brand of the good. c. Demand is more elastic the smaller percentage of the​ consumer's budget the item takes up. d. Demand is more elastic in the long run than it is in the short run.

Demand is more elastic in the long run than it is in the short run.

Which of the following is an example of​ specialization?

Different workers in a shoe factory being allotted different parts of shoe making instead of a worker making an entire shoe

Refer to the graph below; Identify the curves in the diagram. graph v

E = marginal cost curve; F = average total cost curve; G = average variable cost curve; H = average fixed cost curve.

Which of the following is a characteristic shared by a perfectly competitive firm and a monopoly?

Each maximizes profits by producing a quantity for which marginal revenue equals marginal cost.

A study shows that the price elasticity of demand for Shampoos is estimated at - 0.45. Which of the following could explain why the price elasticity of demand for shampoos is so low?

There are few close substitutes for shampoos.

Ordinarily, governments attempt to promote competition in markets. Why do governments use patents to block entry into some markets when this prohibits competition?

Patents encourage firms to spend money on research necessary to create new products

Suppose that a firm in a competitive market succeeds in producing a superior product and selling it at a price that generates a large demand. As a result, the firm's market share is almost 100 percent. Meanwhile, other firms are trying to regain their market shares through research and development. Is this firm a monopolist?

Yes, because it is virtually the only firm in the market.

A perfectly competitive firm produces​ 3,000 units of a good at a total cost of​ $36,000. The fixed cost of production is​ $20,000. The price of each good is​ $10. Should the firm continue to produce in the short​-run?

Yes, it should continue to produce because it is minimizing its loss

Suppose that the equilibrium price and quantity of new houses both increase. Which of the following could be a cause of this change?

a. The demand for new houses increased and the supply did not change.

A natural monopoly is most likely to occur in which of the following industries?

an industry where fixed costs are very large relative to variable costs

A price ceiling refers to​ ________.

b. the upper limit on the price of a good

Microsoft hires marketing and sales specialists to decide what prices it should set for its products, whereas a wealthy corn farmer in Iowa, who sells his output in the world commodity market, does not. Why is this so?

because Microsoft could potentially lose sales if it sets prices indiscriminately

The price elasticity of demand for electricity is minus 0.3. If the government wants to reduce electricity consumption by​ 15 percent. The government must​ ________ the price of electricity by​ ________.

raise; 50 percent

There is a persistent shortage of nurses in your state. Based on this observation, you suspect that:

the nurses' salary at your state is lower than the equilibrium salary.

Refer to the table below. What is the total cost of this firm when it doesn't produce any output? table e

$100

Refer to the figure below. If a minimum wage of $30 an hour is mandated, how many workers are hired at this min wage? same as graph t

120,000

Refer to the Figure below. If the market price is $30, the firm's profit-maximizing output level is graph z

180

Refer to the figure below. If a minimum wage of $30 is mandated, what will be the resulting deadweight loss, if any. graph t

2,070 thousand

Refer to the table below which shows the technology of production at the Matsuko's Mushroom Farm for the month of May. Diminishing marginal returns sets in when the​ ________ worker is hired. table d

3rd

Elton decides to open a restaurant. His expenses at the end of the first year are: $18,000 rent, $20,000 for food and other supplies, $10,000 for his waiters. His revenue was $65,000. Before opening the restaurant Elton was a telephone repairman earning $40,000 annually. He also had $10,000 in the bank that was earning 5 percent interest per annum. He withdrew this to start the business. What is Elton's implicit costs?

40,500

Elton decides to open a restaurant. His expenses at the end of the first year are: $18,000 rent, $20,000 for food and other supplies, $10,000 for his waiters. His revenue was $65,000. Before opening the restaurant Elton was a telephone repairman earning $40,000 annually. He also had $10,000 in the bank that was earning 5 percent interest per annum. He withdrew this to start the business. what is Elton's restaurant explicit cost?

48k

Refer to the table below which shows the technology of production at the​ Matsuko's Mushroom Farm for the month of May.What is the marginal product of the 4th​ worker? table d

5 pounds

The figure below shows the​ demand, marginal cost ​(MC​) and average total cost ​(ATC​) curves for​ Jason's House of Apples. Jason is currently producing 20 thousand pounds of apples. To maximize his profit Jason should graph y

increase production to the output rate indicated by point d

If a perfectly competitive apple farm's marginal revenue exceeds the marginal cost of the last bushel of apples sold, what should the farm do to maximize its profit?

increase output

refer to figure below. the firm's profit-maximizing price is graph c2

$68

Figure below shows the cost structure for a firm. When the output level is 100 units average fixed cost is graph w

$8

Refer to the figure below. If output is 100 units what is the fixed cost of production? graph w

$800

The Figure below. At price P1, the firm would produce graph b2

0 units

Recently, Netflix decided to raise the price of its service from $8 to $16 (66 percent increase). As a result, the number of Netflix subscribers fell from 60 million to 40 million (40 percent drop). What would be the price elasticity of demand for Netflix users?

0.61 (in absolute value)

A newspaper story on the effect of higher milk prices on the market for ice cream contained the​ following:​"As a result​ [of the increase in milk​ prices], retail prices for ice cream are up 4 percent from last year. . . . And ice cream consumption is down 3​ percent."​Source: John​ Curran, "Ice​ Cream, They​ Scream: Milk Fat Costs Drive Up Ice Cream​ Prices," Associated​ Press, July​ 23, 2001.Based on the information​ given, what is the price elasticity of demand for ice​ cream?

0.75 (in absolute value)

If a firm produces 20 units of output and incurs a total cost of $1,000 and a variable cost is $700, calculate the firm's average fixed cost of production if it expands output to 25 units.

$12

When a firm produces 50,000 units of output, its total cost equals $6.5 million. When it increases its production to 70,000 units of output, its total cost increases to $9.4 million. Within this range, the marginal cost of an additional unit of output is

$145

The figure below illustrates the demand and supply of decorative light bulbs in a perfectly competitive market. What is the social surplus if the market is in equilibrium? graph l

$150

Now suppose the demand curve remains constant but the market price of frozen pizzas in Decorah, IA increases to $14 per pizza. The loss in consumer surplus in this market due to the $4 increase in the price of frozen pizza is ________. graph i

$2,080

Refer to the table below. What is the average total cost of producing 5 units of output? table e

$22

If the market price is $25 in a perfectly competitive market, the marginal revenue from selling the fifth unit is

$25

The figure below shows the demand and supply curves for bottled water. If a price control is imposed at $8, what is the deadweight loss? graph m

$50

Sean owns the only pool cleaning service in his town. If he charges $50 per cleaning, he has 10 weekly customers. If he wants to add an 11th customer, he needs to drop his price to $45. What is Sean's marginal revenue for the 11th customer?

-$5

Which of the following would be categorized as an implicit ​cost?I. not being able to spend your​ $10,000 savings if you sink the money in your businessII. the cost of purchasing supplies for your house-cleaning businessIII. the cost of purchasing auto insurance for your dry-cleaning delivery business

. I only

Jayanthi moves her yoga studio from her home to a space she rents in Oakland, California. Holding everything else constant, as a result of this move

. her implicit cost falls and her explicit cost rises

Alisha owns the Coffee Cup coffee truck. Which of the following would be ​short-run decisions for​ Alisha? i. how much fruit to buy ii. how many workers to hire iii. installing a new stove in his truck.

. i and ii.

If a firm shuts down, it

. incurs an economic loss equal to its total fixed cost

A rent control is an example of a​ ________.

. price ceiling

A minimum wage policy is an example of a​________.

. price floor

Holly spends exactly $50 on coffee each month. The price of tea decreases, while the price of coffee remains the same. Holly's cross price elasticity of demand of coffee with respect totea is ________.

0

Sam spends exactly $80 on beer each month. The price of wine decreases sharply, while the price of beer remains the same. Sam's cross price elasticity of demand of beer with respect to wine is ________.

0

The retail market for beef in Argentina is given by the following demand and supply schedules, where the price is in Argentine pesos per kilo and the quantity is millions of kilos per year. Refer to the scenario above. In the initial competitive market equilibrium, consumer surplus is ________ million pesos, producer surplus is ________ million pesos, and social surplus is ________ million pesos. graph o

5,000; 5,000; 10,000

Refer to the figure below. If a minimum wage of $30 an hour is mandated, what is the quantity of labor supplied? graph t

500,000

Lauren runs a chili restaurant in San Francisco. Her total revenue last year was​ $110,000. The rent on her restaurant was​ $48,000, her labor costs were​ $42,000, and her​ materials, food and other variable costs were​ $20,000. Lauren could have worked as a biologist and earned​ $50,000 per year. An economist calculates her implicit costs as

50k

Refer to Figure below. Suppose the monopolist represented in the diagram below produces positive output. What is the profit-maximizing/loss-minimizing output level? graph c2

630 units

Refer to the Figure below. If the market price is $160, the firm's profit-maximizing output level is graph x

85

Figure below shows the demand and cost curves for a monopolist. What is the economically efficient output level? graph e2

940 units

There are about 2,000 nail salons in New York City. Most salons are small businesses and offer a wide array of services. Based on this information, which of the following best describes the structure of this market in New York City?

A monopolistic competition

Which one of the following about a monopoly is false? A monopoly could make profits in the long run. A monopoly could break even in the long run. A monopoly must have some kind of government privilege or government imposed barrier to maintain its monopoly. A monopoly status could be temporary.

A monopoly must have some kind of government privilege or government imposed barrier to maintain its monopoly.

Studies show that the income elasticity of demand for wine is approximately five. What does this mean?

A one percent increase in income leads to a five percent increase in wine consumption.

The pie chart below shows the market shares of various desktop operating systems in 2013 (http://www.netmarketshare.com/). Different operating systems have different look and feel and different features from one another. Based on this information, which of the following best describes the structure of desktop OS market? pie chart a

An oligopoly with differentiated products

Below you are provided with demand and supply curve for labor. a. Identify the consumer surplus is generated when the hourly wage is the equilibrium wage. (Identify which area represents the CS and compute the CS at equilibrium wage.) b. Identify the producer surplus is generated when the hourly wage is the equilibrium wage. (Identify which area represents the CS and compute the CS at equilibrium wage.) c. Identify the total surplus is generated when the hourly wage is the equilibrium wage. (Identify which area represents the CS and compute the CS at equilibrium wage.) graph p

Answer: a. The area of triangle A represents the consumer surplus. The consumer surplus is $2250 at equilibrium wage (1/2(11-8)x1500=2250). b. The producer surplus is represented by the area of triangle B. The producer surplus is $4500 at equilibrium wage (1/2(8-2)x1500). c. The total surplus is represented by area of triangle A and B. The total surplus is $6750 (because 2250+4500=6750).

Refer to Figure below What is likely to happen to this monopoly in the long run? graph d2

As long as there are entry barriers, this firm will continue to enjoy economic profits.

Which of the following correctly describes how price adjustments eliminate a shortage?

As price rises, the quantity demanded decreases and the quantity supplied increases

Which of the following statements is true of competitive market equilibrium?

At the competitive equilibrium, there are no unexploited gains from trade

Which of the following is not true for a firm in perfect competition? a. Marginal revenue equals the change in total revenue from selling one more unit. b. Average revenue is greater than marginal revenue. c. Profit equals total revenue minus total cost. d. Price equals average revenue.

Average revenue is greater than marginal revenue.

In the Unites States, the cost of producing cigarettes has increased and at the same time, more and more Americans are choosing to not smoke cigarettes. Which of the following best explains the effect of these events in the cigarette market?

Both the supply and demand curves have shifted to the left. As a result, there has been a decrease in the equilibrium quantity and an uncertain effect on the equilibrium price.

The automobile market in the United States is often said to be highly competitive. But it is not perfectly competitive. What makes this market not perfectly​ competitive?

Different car companies make different vehicles with different features.

Refer to Figure 15-10. The deadweight loss due to a monopoly is represented by the area graph f2

FHE.

Erika is walking around a big department store when she finds a shirt that she really loves. The price tag is torn off, so she can't find the price. She decides that as long as the shirt is less than $40, she will buy it. When she goes to the register, she discovers that the shirt originally cost $50, but it's on sale for $32. Which of the following is true about Erika's consumer surplus.

If Erika buys the shirt, she will have a consumer surplus of $8.

Karen decides that as long as someone is willing to pay more than $100, she'll sell her couch on Craigslist. She lists her couch for $300, and the next day someone calls her up and offers her $250.

If Karen sells her couch, she will have a producer surplus of $150.

As consumers' incomes decrease, the demand curve for bologna sandwiches shifts to the right. Therefore bologna sandwiches are:

Inferior goods

Economic incentives are designed to make individual self-interest coincide with social interest. According to economists, which of the following methods of pollution control best uses economic incentives to reduce pollution?

Instituting a system of tradable emission allowances.

Salmon fishing in Alaska is a seasonal​ business; May through September is the best time to bait salmon and halibut. Toland​ Fisheries, a small commercial​ fishery, recorded its highest ever catch last year. They started this​ year's fishing season with the same number of workers and equipment. With the new season also starting​ well, Toland has increased hiring substantially.​ However, the fishery did not make any additional investment in trawlers and other fishing equipment.Other things remaining​ unchanged, what is likely to happen to the marginal product of each new worker in the short​ run?

It will be increasing at a decreasing ​rate, meaning each additional worker will have a lower marginal product of labor than the previous one hired.

New York​ City, which has had a rent ceiling law for more than fifty​ years, has many abandoned apartment buildings throughout the city. Which of the following explains​ this?

Landlords have no incentive to finance maintenance and remodeling of apartment buildings.

Which of the following could be evidence of a market failure? a. Market prices do not reflect true production costs. b. There are only a handful of firms competing against each other in an industry. c. Resources in an economy are not fully utilized. d. The market price of a product is above the average cost of production.

Market prices do not reflect true production costs.

Do all buyers benefit from a binding price ceiling?

No. A binding price ceiling benefits only some buyers because not all are able to obtain the good in the legal market.

If a monopolist's price is $50 per unit and its marginal cost is $25, then

Not enough information is given to say what the firm should do to maximize profit.

You have a part-time job teaching voice and piano lessons to young students at your music studio. You currently charge $20/lesson and have 30 students. Suppose when you raise your price to $25/lesson and do not lose a single student. How much revenue will you gain? Using the revenue test, what does this tell us about the Price Elasticity of Demand?

P1 = $20 and Q1= 30; TR = $20 x 30 = $600 P2 = $25 and Q2 = 30 remains the same. And TR = $25 x 30 = $750 This results indicates that the demand you are facing with is a perfectly inelastic demand curve and you gained $150 in revenue. ////When the price increases, the revenue would be $750 (because 25 x 30=750). The revenue test states that if the price increases and the revenue also increases, then the demand is inelastic. The Price Elasticity of Demand states that if the demand is inelastic then the Price Elasticity of Demand is less than 1.

Refer to the diagram below. Assume that the graphs in this figure represent the demand and supply curves for used cars, an inferior good. Which panel describes what happens in this market as a result of a decrease in consumers' income? same graph as graph d

Panel (c)

Refer to the diagram below. Assume that the graphs in this figure represent the demand and supply curves for Fruitopia, a soft drink. Which panel describes what happens in the market for Fruitopia when the price of Snapple, a substitute product (in consumption), decreases? graph c

Panel (d)

`````Refer to the diagram below. Assume that the graphs in this figure represent the demand and supply curves for potatoes and that steak and potatoes are complements. What panel describes what happens in this market when the price of steak falls? graph d

Panel c

Which of the following statements is true? a. Production in a perfectly competitive market is efficient because resources in the market leave those sectors in which price cannot cover their costs of production and enter those sectors in which price can cover their costs of production. b. Production in a perfectly competitive market is Pareto efficient because the government or a central planner carefully analyzes the needs and requirements of society and instructs firms on what to produce and in what quantity. c. Production in a perfectly competitive market is Pareto inefficient because the government or a central planner carefully analyzes the needs and requirements of society and instructs firms on what to produce and in what quantity. d. Production in a perfectly competitive market is suboptimal because the absence of free entry and exit of firms allows firms to specialize in only one particular industry.

Production in a perfectly competitive market is efficient because resources in the market leave those sectors in which price cannot cover their costs of production and enter those sectors in which price can cover their costs of production.

Almost every holiday season at least one gift idea achieves fad status. When that happens, prices tend to increase dramatically. Why?

Quantity demanded exceeds quantity supplied.

Which of the following offers the best reason why restaurants are not considered to be perfectly competitive firms?

Restaurants do not sell identical products.

In Walnut Creek, California, there are three very popular supermarkets: Safeway, Whole Foods, and Lunardi's. While Safeway remains open twenty-four hours a day, Whole Foods and Lunardi's close at 9 pm. Which of the following statements is true?

Safeway has a monopoly at midnight but not during the day.

Phil Sanders, an economics major who recently graduated from a local college, was hired as a consultant by the Middletown City Council. A member of the council proposed lowering fares for public transportation buses and trolleys). He reasoned that the lower price would increase both the number of people using public transportation and revenue from fares. The increased revenue would be used to buy new buses. Then he estimated price elasticities of demand, Sanders found that the price elasticity of demand for both bus and trolley service was −0.6. What advice should Sanders give the city council?

Since the price elasticity of demand is less than 1, that means the demand is inelastic. This means that even if the prices were to go up, many people will still continue to purchase the service. Instead of lowering the price, they should increase the price for public transportation in order to increase their revenue.

Prices of California Merlot wine (assume that this is a normal good) have risen steadily in recent years. Over this same period, prices for French oak barrels used for wine storage have dropped and consumer incomes have risen. Which of the following best explains the rising prices of California Merlots?

The demand curve for Merlot has shifted to the right faster than the supply curve has shifted to the right.

Refer to Figure below. What is the difference between the monopoly's price and perfectly competitive industry's price? graph e2

The monopoly's price is higher by $13.

The figure to the right represents the market for pecans. Assume that this is a competitive market. If the price of pecans is $3, what changes in the market would result in an economically efficient output?

The price would increase, the quantity demanded would decrease, and the quantity supplied would increase.

According to a study of the price elasticities of products sold in​ supermarkets, the price elasticity of demand for toothpaste is estimated at minus 0.45. Which of the following could explain why the price elasticity of demand for toothpaste is so​ low?

There are few close substitutes for toothpaste.

The table at the right shows the demand and supply schedules for the labor market in the city of Pixley. What is the equilibrium hourly wage ​(W​*) and the equilibrium quantity of labor ​(Q​*)? (table a)

W​*​= $10.50; Q​*​= 590,000

Government imposed quantitative limits on the amount of pollution firms are allowed to produce is an example of

a command-and-control approach to pollution reduction

Which of the following will increase a perfectly competitive seller's short-run supply and shift the firm's short-run supply curve rightward?

a decrease in marginal cost

Orange juice drinkers want to consume more orange juice at a lower price. Which of the following events would have this effect?

a decrease in the price of orange

Which of the following items is likely to have the highest income elasticity of demand? a hamburger b. breakfast cereal c. water d. a luxury cruise to several European countries

a luxury cruise to several European countries

Compared to a monopolistic competitor, a monopolist faces;

a more inelastic demand curve.

Refer to Figure below. If the current market price is $60, the market will achieve equilibrium by same as graph s

a price increase, increasing the quantity supplied and decreasing the quantity demanded.

The figure shows the market for finish carpenters in Bozeman. If there is a minimum wage set at​ $18, then there will be graph g

a surplus of 200 workers.

What is a market failure? a. It refers to the inability of the market to allocate resources efficiently up to the point where marginal social benefit equals marginal social cost. b. It refers to a situation where an entire sector of the economy (for example, the airline industry) collapses because of some unforeseen event. c. It refers to the inability of the market to allocate resources efficiently up to the point where marginal social benefit equals marginal private cost. d. It refers to a breakdown in a market economy because of widespread corruption in government.

a. It refers to the inability of the market to allocate resources efficiently up to the point where marginal social benefit equals marginal social cost.

Consider the following three goods: 1) a non - alcoholic drink, 2) an iced coffee, and 3) a caffeinated drink. Rank the demand of these three goods by their expected price elasticities of demand from most elastic to least elastic.

an iced coffee, a caffeinated drink , and a non-alcoholic drink.

If consumers want to buy more electric cars at a lower price. All of the following events would have this effect except; a. technological advancement in the production of electric car batteries. b. a decrease in the price of lithium, which is used in the electric car batteries. c. an increase in the price of gasoline. d. an increase in the number of manufacturers of electric cars.

an increase in the price of gasoline.

Which of the following statements is false? a. In the short run: total cost = fixed cost + variable cost. b. An explicit cost is a nonmonetary opportunity cost. c. Variable costs are costs that change as output changes. d. In the long run there are no fixed costs.

b. An explicit cost is a nonmonetary opportunity cost

Kiwis and strawberries are substitutes for consumers. A decrease in the price of kiwis coupled with an increase in the number of strawberry growers ________ the equilibrium price of a pound of strawberries and ________ the equilibrium quantity of strawberries.

b. lowers, but more information is needed to determine if it increases or decreases

Economists argue that the level of pollution should be

b. reduced to the point where the marginal benefit of pollution reduction is equal to the marginal cost of pollution reduction to society.

The law of diminishing marginal returns states a. that at some point, adding more of a fixed input to a given amount of variable inputs will cause the marginal product of the variable input to decline. b. that at some point, adding more of a variable input to a given amount of a fixed input, will cause the marginal product of the variable input to decline. c. average total costs of production initially falls and after some points starts to rise at a decreasing rate as output increases. d. that in the presence of a fixed factor, at some point average product of labor starts to fall as more and more variable inputs are added.

b. that at some point, adding more of a variable input to a given amount of a fixed input, will cause the marginal product of the variable input to decline.

Why does a monopoly cause a deadweight loss?

because it does not produce some output for which marginal benefit exceeds marginal cost

Which of the following is a fixed cost? a.payments to an electric utility b. costs of raw materials c. payment to hire a security worker to guard the gate to the factory around the clock d. wages to hire assembly line workers

c. payment to hire a security worker to guard the gate to the factory around the clock

Refer to Figure below. Why is there a deadweight loss? graph g2 a. because the marginal social cost of producing each additional unit in excess of Q2 exceeds the marginal benefit b. because the marginal social benefit of producing each additional unit in excess of Q2 exceeds the private cost c. because the marginal private cost of producing each additional unit in excess of Q2 exceeds the marginal benefit d. because the marginal private benefit of producing each additional unit in excess of Q2 exceeds the social cost

because the marginal social cost of producing each additional unit in excess of Q2 exceeds the marginal benefit

In cities with rent ​controls, the actual rents paid can be higher than the legal maximum. One explanation for this is

because there is a shortage of​ apartments, tenants often are willing to pay rents higher than the law allows.

Suppose that iPhones are normal goods. If the income of iPhone users decreases, you predict that in the market for iPhones,

both equilibrium price and quantity will fall

An oligopoly firm is similar to a monopolistically competitive firm in that both firms face the prisoner's dilemma. both operate in a market in which there are significant entry barriers. both firms have market power. both firms are in industries characterized by an interdependent firm.

both firms have market power.

Which of the following goods would have the most inelastic​ demand ski vacations b. luxury cars c. big screen TVs d. bread

bread

The price of a gallon of gasoline in Bonland is​ $3.20. However, just before the​ election, the government decides to fix the price of gasoline at​ $2.80 per gallon. This is an example of a​ ________.

c. price ceiling

Candy makers accurately anticipate the increase in demand for candy for Halloween so that the supply of candy and demand for candy increase the same amount. As a result, the price of candy ________ and the quantity of candy ________.

c. does not change; increases

Which of the following products comes closest to having a perfectly price inelastic​ demand? gasoline b. iPhones c. cholesterol medication in general d. bus rides

cholesterol medication in general

The table above lists the highest prices five consumers are willing to pay for a theater ticket. If the price of one ticket falls from $24 to $10, same as table c

consumer surplus increases from $0 to $31.

Some policymakers have argued that products like cigarettes, alcohol, and sweetened soda generate negative externalities in consumption. If the government decided to impose a tax on soda, the government will cause

consumers to internalize the externality.

Of the following industries, which are perfectly competitive? Restaurants Corn College education Local radio and television

corn

Assume that emissions from electric utilities contribute to pollution in the form of acid rain. Which of the following describes how this affects the market for electricity? a. The equilibrium in the market is not efficient; consumer surplus is equal to producer surplus. b. The equilibrium in the market is not efficient; because of the cost of the acid rain, economic efficiency would be greater if more electricity were produced. c. The equilibrium in the market is not efficient; the marginal benefit from electricity is greater than the marginal social cost. d. A deadweight loss occurs; at equilibrium the additional social cost of production is greater than the additional benefit to consumers

d. A deadweight loss occurs; at equilibrium the additional social cost of production is greater than the additional benefit to consumers.

Which of the following conditions holds in an economically efficient competitive market equilibrium?

d. There are no positive and no negative external effects from consumption and production.

The cost of producing cigarettes in the United States has increased and at the same time, more and more Americans are choosing to not smoke cigarettes. Which of the following best explains the effect of these events in the cigarette market?

d. Both the supply and demand curves have shifted to the left. As a result, there has been a decrease in the equilibrium quantity and an uncertain effect on the equilibrium price.

All of the following are examples of sunk costs, except; a. The cost of purchasing land for a new office space b. The cost of installing new software on all office computers c. The annual rent paid for an office space d. The cost of the electricity used in an office

d. The cost of the electricity used in an office

If policymakers use a pollution tax to control pollution, the tax per unit of pollution should be set a. equal to the amount of the deadweight loss created in the absence of a pollution tax. b. equal to the marginal private cost of production at the economically efficient level of pollution. c. at a level low enough so that producers can pass along a portion of the additional cost onto consumers without significantly reducing demand for the product. d. equal to the marginal external cost at the economically efficient level of pollution.

d. equal to the marginal external cost at the economically efficient level of pollution.

Perfectly inelastic demand is represented by a demand curve which is ________, and relatively inelastic demand is represented by a demand curve which is ________.

d. vertical; downward sloping

The graph shows the market for labor. If the government imposes a minimum wage of​ $15 per​ hour, which of the following will​ occur? i.​ 50,000 workers will be hired.ii.​ 200,000 people will be unemployed.iii. A deadweight loss will occur. graph f

d. ​i, ii, and iii

The price elasticity of demand for beef is estimated to be 0.60​ (in absolute​ value). This means that a 20 percent increase in the price of​ beef, holding every thing else​ constant, will cause the quantity of beef demanded to

decrease by 12 percent.

If increases in government regulations have increased the cost of producing gasoline-powered lawnmowers, you accurately predict that in the market for gasoline-powered lawnmowers, there will be a(n)

decrease in the supply of gasoline-powered lawnmowers, an increase in the price, and a decrease in the demand

Each point on a ________ curve shows the willingness of consumers to purchase a product at different prices.

demand

A service station owner in Staten​ Island, New​ York, was worried that raising the price of gasoline would cause the quantity demanded to fall by so much that he would be in a worse situation than if he did not raise the price. If raising the price of gasoline would cause the owner to receive less total revenue from the sale of​ gasoline, the demand for gasoline is

elastic

The table below lists the highest prices five consumers are willing to pay for a theater ticket. If the price of one of the tickets is $10, table c

everyone will buy a ticket except for Josh.

All of the following characteristics are common to both monopolistic competition and perfect competition except firms act to maximize profit. entry barriers into the industries are low. the market demand curves are downward-sloping. firms take market prices as given.

firms take market prices as given

What does the phrase "internalizing an external cost" mean?

forcing producers to factor into their production costs the cost of the externalities created in the production of their output

If the marginal benefit of reducing emissions of some air pollutant is less than the marginal cost

further reduction will make society worse off.

When there is an externality in a market

government intervention may increase economic efficiency.

The buyers of a good will want to purchase it as long as their willingness to pay for the good is:

greater than or equal to the price.

The Code of Federal Regulation (CFR) Title 39 Section 310.2 statesIt is generally unlawful under the Private Express Statutes for any person other than the Postal Service in any manner to send or carry a letter on a post route or in any manner to cause or assist such activity. Violation may result in injunction, fine or imprisonment or both and payment of postage lost as a result of the illegal activity...Under these laws, the U.S. Postal Service ________.

has a monopoly power over private express mail

Some colleges now offer massive open online courses​ (MOOCs), where students do not need to be in the same classroom as their instructors. The fixed cost of an online course is relatively​ ________, but after the courses are placed​ online, the marginal cost of providing instruction to an additional student is​ ________.

high; low

Ben's Peanut Shoppe suffers a short-run loss. Ben will not choose to shut down if

his Shoppe's total revenue exceeds his variable cost.

The Coase theorem states that

if transactions costs are low, private bargaining will result in an efficient solution to the problem of externalities.

A monopoly differs from monopolistic competition in that

in a monopoly there are significant entry barriers but there are low barriers to entry in a monopolistically competitive market structure.

If tickets to a rock concert are set at $75 but only half of the arena seats are sold, then it is accurate to state that the market for these tickets is ________, and the concert promoters would be wise to ________ ticket prices.

in disequilibrium; lower

The figure shows the market for finish carpenters in Bozeman. There is a minimum wage set at​ $18. Compared to the initial equilibrium without the minimum​ wage, once the minimum wage is in place and after taking account of job​ search, the total​ workers' surplus​ ________ and the total​ firms' surplus​ ________. same as graph g

increases; decreases

When the price of tortilla chips rose by 10 ​percent, the quantity of tortilla chips sold fell 4 percent. This indicates that the demand for tortilla chips is

inelastic

The demand for gasoline in the short run is

inelastic because there are no good substitutes for gasoline in the short run.​

Suppose you are considering buying stock in the stock market, and your objective is to maximize your net worth. Furthermore, your study of the market reveals that the economy will be slowing down over the next several months. Under these conditions, it would be best to purchase stock in companies that produce

inferior good

The price a perfectly competitive firm receives for its output

is determined by the interaction of all sellers and all buyers in the firm's market.

Compared to perfect competition, the consumer surplus in a monopoly

is lower because price is higher and output is lower.

An advantage of imposing a tax on the producer that generates pollution is that

it forces the polluting producer to internalize the external cost of the pollution.

Which of the following activities create a negative externality?

keeping a junked car parked on your front lawn

Which of the following goods is likely to have the highest price elasticity of​ demand? Life-saving drugs b. Ketchup c. Salt d. Gasoline

ketchup

Refer to the Figure below. If the market price is $30 and the firm is producing output, what is the amount of the firm's profit or loss? graph z

loss of $1,080

Refer to Figure below Suppose the monopolist represented in the diagram above produces positive output. What is the profit/loss per unit? graph c2

loss of $7 per unit

For a perfectly competitive firm, at profit maximization

marginal revenue equals marginal cost.

The size of a deadweight loss in a market is reduced by

market price being close to marginal cost.

The invisible hand is mostly guided by ________.

market prices

***Consider the market for new textbooks, a normal good. The income of students increases, while the cost of shipping textbooks to buyers falls because of the implementation of drone shipping. What will happen to the equilibrium price and quantity?

not b. the equilibrium price will decrease and the change in the equilibrium quantity will beunknown not both the equilibrium price and the equilibrium quantity will either stay the same, increase ordecrease.

If you expect the economy is going to boom and average income in the economy will rise in the foreseeable future, the type of firm that would be able to increase its sales if your expectations are met is

one that sells a luxury good.

Refer to the figure below. Consider the labor market for fuel-efficient vehicle technologies in the United States is illustrated in the figure below. The United Auto Workers (UAW) union organizes these workers and has negotiated a wage of $30.00 an hour. Union wage is an example of graph t

price floor

The government of Lithasia has decided to set a minimum price for certain agricultural products in order to safeguard​ farmers' interests. This is an example of a​ ________.

price floor

Refer to the Figure below. If the market price is $160 and the firm is producing output, what is the amount of the firm's profit or loss? graph x

profit of $3,400

One reason why in the short​ run, the marginal product of labor might increase initially as more workers are hired is that

specialization allows a worker to focus on one​ task, thereby increasing her proficiency at that task.

Which of the following is not an option for a perfectly competitive firm that suffers short-run losses? a.reducing production b. reducing the use of variable factors c. shutting down d. raising price

raising price

Which of the following is an implicit cost of​ production? interest paid on a loan to a bank. b. rent that could have been earned on a building owned and used by the firm. c. the utility bill paid to​ water, electricity, and natural gas companies. d. wages paid to labor plus the cost of carrying benefits for workers.

rent that could have been earned on a building owned and used by the firm.

Consider the market for imported wine and sprits. In response to Covid-19 pandamic, in January 2020, the U.S. government raised tariff on French Champagne and other sparkling wines. As the result of higher tariff, the price of imported wine will ________ and the quantity of imported wine will __________ .

rise; fall

If a market begins in equilibrium and then the demand curve shifts rightward, a

shortage is created, which is eliminated by a rise in price.

Copy of Refer to the figure below; (graph b) If the price is $6, then there is a:

shortage of 15 units.

Refer to Figure below. If the firm's average total cost curve is ATC, the firm will graph c2

suffer a loss.

________ are costs that, once committed, can never be recovered and should not affect current and future production costs.

sunk costs

If a market begins in equilibrium and then the demand curve shifts leftward, a

surplus is created, which is eliminated by a *fall in price.*

Refer to the figure below. If a minimum wage of $30 is mandated there will be a graph t

surplus of 380,000 units of workers.

One reason patent protection is vitally important to pharmaceutical firms is

the approval process for new drugs through the Food and Drug Administration can take more than 10 years and is very costly. Patents enable firms to recover costs incurred during this process.

All of the following cost curves are​ U-shaped except a. the average variable cost curve b. the average total cost curve c. the average fixed cost curve d. the marginal cost curve

the average fixed cost curve

The price of coffee rose 40 percent and the quantity of coffee demanded fell by 20 percent. The quantity of doughnuts demanded also fell by 20 percent. From this information, we can conclude that

the cross elasticity demand between coffee and doughnuts is − 0.5. Answers:

With production of many new-vehicle lines being slowed or halted by the current microchip shortage, a lack of supply has sent more U.S. consumers (even rental companies) to the used-car market. At the same time, supply of used cars has decreased since there are fewer trade-inns. How would these events affect the market for used cars?

the equilibrium price will increase and the change in the equilibrium quantity will be unknown.

Billy runs an accounting firm. He has three full-time employees who are paid an annual salary of $135,000 each. For 4 weeks during the tax preparation season, Billy hires additional staff on a temporary basis to meet the surge in demand for his firm's service. Billy must also pay a premium for professional liability insurance for the whole firm every month. For Billy's firm, ________.

the full-time employees and the liability insurance are fixed inputs

Which of the following is an implicit cost of ​production? a.the utility bill paid to​ water, electricity, and natural gas companies b. the salary you pay yourself for running your business c. the loss in the value of capital equipment due to wear and tear d. the interest you pay your mother for the money she loaned you to start your business

the loss in the value of capital equipment due to wear and tear

Suppose there are several paper mills producing paper for a market. These mills, located upstream from a fishing village, discharge a large amount of wastewater into the river. The waste material affects the number of fish in the river and the use of the river for recreation and as a public water supply source. Figure below shows the paper market. Refer to Figure above. What does S1 represent? graph g2 a. the market supply curve that reflects social cost b. the market supply curve that reflects only external cost c. the market supply curve that reflects private cost d. the market supply curve that reflects only private benefit

the market supply curve that reflects private cost

The supply curve of a perfectly competitive firm in the short run is

the portion of the​ firm's marginal cost curve above the minimum point of the average variable cost curve.

Pineapples and kumquats are substitute goods. Exceptional weather in Guatemala resulted in a bumper crop of pineapples, as the result;

the price of both pineapples and kumquats will fall.

Suppliers will be willing to supply a product only if

the price received is at least equal to the additional cost of producing the product.

In evaluating the degree of economic efficiency in a market, we can state that the size of the deadweight loss in a market will be smaller

the smaller the difference between marginal cost and price.

What is a "social cost" of production?

the sum of all costs to individuals in society, regardless of whether the costs are borne by those who produce the products or consume the product

Refer to the figure below. Diminishing marginal returns begin to occur when ________. graph u

the third worker is hired

When a competitive equilibrium is achieved in a market

the total net benefit to society is maximized.

A monopoly is characterized by all of the following except there are only a few sellers, each selling a unique product. entry barriers are high. there are no close substitutes to the firm's product. the firm has market power.

there are only a few sellers, each selling a unique product.

When there is market failure so that a market produces less than the efficient amount,

there is a deadweight loss.

When there is market failure so that a market produces less than the efficient amount,

there is deadweight loss

If prices are held above the equilibrium price, ________.

there will be a surplus in the market

Refer to the diagram below. Suppose the prevailing price is P1 and the firm is currently producing its loss-minimizing quantity. In the long run graph a2

there will be fewer firms in the industry and total industry output decreases.

Price ceiling laws are passed because

they make a good less expensive for those customers who are able to purchase the good in the legal market.

What is the rationale behind a marketable emission allowance scheme?

to provide firms with the incentive to consider less costly alternatives to pollution reduction by making firms pay for the right to pollute beyond their specified allowance

If there are no externalities, a competitive market achieves economic efficiency. If there is a negative externality, economic efficiency will not be achieved because

too much of the good will be produced.

If the paint on your house was eaten away by the fumes from a factory nearby and you hired a lawyer to sue the polluting firm, your legal fees would be considered

transactions costs.

Few firms in the United States are monopolies because

when a firm earns profits, other firms will enter its market.

A monopolist's profit-maximizing price and output correspond to the point on a graph

where marginal revenue equals marginal cost and charging the price on the market demand curve for that output.

When the price of tortilla chips rose by 10 percent, the quantity of tortilla chips sold fell 4 percent, and the sale of dips (like salsa and bean dip) fell 8 percent. This set of facts indicates that the cross-price elasticity between tortilla chips and dips is ________, so the two are ________.

− 0.8; complements