Microeconomics Test #1
2
A local pizzeria raised its price from $9 to $11 for each pizza and the sales of its pizza decreased from 150 to 100 per day. What is the price elasticity of demand in this case?
A value judgment.
A normative statement concerns
Ties; Shirts
Anna and Maria produce shirts and ties. The figure above shows Anna's PPF and Maria's PPF. Anna and Maria can achieve the gains from trade if Anna produces ________ and Maria produces ________.
Is a luxury
Because Product X has a large positive income elasticity, it is likely that the product
Consume at a point beyond their individual production possibilities frontiers.
By specialization and trade, two individuals can
The highest price consumers are willing and able to pay for that particular unit of a good.
Each point on the demand curve reflects
Shifts the demand curve for gruel leftward.
Gruel is an inferior good. Hence, an increase in people's incomes
Gasoline and large cars are complements in consumption.
If a decrease in the price of gasoline increases the demand for large cars, then
Price of bikes definitely decreases
If the demand curve for bikes shifts leftward and the supply curve for bikes shifts rightward, the equilibrium
Quantity will decrease.
If the demand for bathing suits and supply of bathing suits both decrease, then definitely the equilibrium
Limited, unlimited
In every economic system, choices must be made because resources are ________ and our wants are
5.00
In the above figure, what is the minimum supply price for the fourth gallon of ice cream?
Arrangements where buyers and sellers get together to buy and sell.
Markets are best defined as
Highest-valued alternative forgone.
Opportunity cost means the
Can be tested against the facts
Positive economic statements
Increases from point d to point a
Refer to the production possibilities frontier in the figure above. The opportunity cost of producting another unit of capital goods
Point C
Refer to the production possibilities frontier in the figure above. Which production point indicates that resources are NOT fully utilized or are misallocated
Point E
Refer to the production possibilities frontier in the figure above. Which production point is unattainable?
1/2 Pizza
Suppose that in an hour Joe can prepare 10 sandwiches or 5 pizzas. The opportunity cost of Joe producing one sandwich is
Opportunity cost
Ted can study for his economics exam or go to a concert. He decides to study for his economics exam instead of going to the concert. The concert he will miss is Ted's ________ of studying for the exam.
Movement along the demand curve.
The "law of demand" is illustrated by a
Figure D
The above figures show the market for hamburger meat. Which figure shows the effect of a newly invented machine which grinds beef at twice the speed previously possible?
Figure A
The above figures show the market for hamburger meat. Which figure(s) shows the effect of a new report by the U.S. Surgeon General that beef consumption is healthier than previously believed?
5 pounds, $6.00 per pound
The above table shows the demand schedule and supply schedule for chocolate chip cookies. An increase in income results in an increase in the demand for chocolate cookies by an amount of 3 pounds at every price. What are the new equilibrium quantity and equilibrium price?
Shortage of 3 pounds of chocolate chip cookies
The above table shows the demand schedule and supply schedule for chocolate chip cookies. If the price is $4.00 per pound, there is a
4 pounds, $5.00 per pound
The above table shows the demand schedule and supply schedule for chocolate chip cookies. What is the equilibrium quantity and equilibrium price for chocolate chip cookies?
Microeconomics
The analysis of the behavior of individual decision-making units is the definition of
400,200
The demand and supply curves for OU tents in Norman, Oklahoma , are given by the following equations: Q = 600- P Q = 200 + P Where P is measured in dollars and Q is the number of shirts sold per year. The equilibrium quantity is _________and the equilibrium price is___________.
Quantity supplied to a change in price.
The elasticity of supply measures the sensitivity of
Scarcity
The fact that wants cannot be fully satisfied with available resources reflects the definition of
Greater in the $8 to $10 range
The figure above illustrates a linear demand curve. By comparing the price elasticity in the $2 to $4 price range with the elasticity in the $8 to $10 range, you can conclude that the elasticity is
Total revenue increases
The figure above illustrates a linear demand curve. If the price falls from $8 to $6
Slope down
The law of demand implies that demand curves
The price elasticity of demand is a unitless measure.
The price elasticity of demand for purses is measured in what units?
Percentage change in quantity demanded divided by the percentage change in price
The price elasticity of demand is calculated as the absolute value of the
Substitutes
The price of an apple increases and people buy more pears. You infer that apples and pears are ________.
Is a normative statement.
The statement that "peach ice cream is better than chocolate ice cream"
Both will benefit
Tom takes 20 minutes to cook an egg and 5 minutes to make a sandwich. Jerry takes 15 minutes to cook an egg and 3 minutes to make a sandwich. If Tom and Jerry trade
A normal good.
When people's incomes increase, the demand for a good increases. The good is called
Increasing marginal cost
Which of the following explains why supply curves slope upward?
Who gets the goods
Which of the following is NOT illustrated by a production possibilities frontier?
Quantity supplied equals the quantity demanded.
Which of the following is the best way to describe equilibrium in a market? At equilibrium, the
A fall in the price of shredded wheat
Which of the following leads to a movement along the supply curve for shredded wheat but does not shift the supply curve for shredded wheat?
A decrease in the price of a factor of production used to produce the good
Which of the following shifts the supply curve rightward?