Micro Test 1

shortage

excess quantity demnaded

surplus

excess supply demanded

What shifts the demand curve?

income, prices of related goods, tastes, expectations, number of buyers

If producers must obtain higher prices than before to produce a given level of output, then the following has occurred:

A decrease in supply

True

If marginal utility is diminishing and is a positive amount, total utility will increase

consumer incomes have fallen

If the demand for steak, shifts to the left, the most likely reason is that

An increase in demand coupled with a simultaneous and bigger decrease in supply will cause equilibrium

Price to go up and quantity to go down

total revenue

Price x Quantity

total revenue test

TR increases with price if inelastic. If TR and price moves in opposite direction price is elastic.

If a firm finds that it can sell $13,000 worth of a product when its price is $5 per unit and $11,000 worth of it when its price is $6, then:

The demand for the product od elastic in the $5-6 price range

the horizontal sum of individual demand curves

The market demand curve is

Law of Supply

The upward slope of the supply curve reflects the

quantity demanded is greater than quantity supplied

There is a shortage in a market for a product when

zero

Where total utility is at a maximum, marginal utility is

The cross elasticity of demand for product x with respect to the price of product y is -1.2. It can be inferred that x and y are

complementary products

If Z is an inferior good, an increase in money income will shift the:

demand curve for Z to the left

If the price elasticity of demand for a product is 2.5 then a price cut from 2.00 to 1.80 will

increase the QUANTITY DEMANDED to 25%

What shifts the supply curve?

input prices, technology, expectations, number of sellers

After eating four slices of pizza, you are offered a fifth slice for free. You turn down the fifth slice. Your refusal indicates that the

marginal utility is positive for the 4th slice and negative for the 5th

An increase in the quantity demanded means that:

price has declined and consumers therefore want to purchase more of the product.