Unit 3 test Econ

market demand to shift to the left

A decrease in consumer preference for a product, other things being equal, will cause

Elastic

A price cut in widgets will increase the total revenue for Widgets, Inc. This means that the demand for widgets is:

for which demand decreases as income increases

An inferior good is a product

One-third

Approximately what portion of annual consumption is typically spent by American households on shelter?

Substitution effect

As the price of a Popeye's chicken sandwich goes up you buy more Whataburger chicken sandwiches is an example of

3.0

Billy Bob's Barber Shop knows that a 5 percent increase in the price of their haircuts results in a 15 percent decrease in the number of haircuts purchased. What is the elasticity of demand facing Billy Bob's Barber Shop?

Behavior economics

Both Jimmy and Billy-Joe make $15 per hour. They have the same amount of money in the bank. Jimmy named his dog Darth Vader and his cat Luke. He calls his 1985 Ford pickup truck Death Star. What economic concept explains his willingness to spend $400 on a Star Wars Lego while Billy-Joe thinks it is way to expensive.

Inelastic

Demand is said to be ___ when the quantity demanded is not very responsive to changes in price.

Elastic

Demand is said to be ___ when the quantity demanded is very responsive to changes in price.

Shift to the right

During a severe recession, the government issued food stamps that could only be used to acquire food to a greater number of families. The budget line graph shows food on the horizontal axis and everything else on the vertical axis. The government expects that issuing the food stamps will cause each family's budget constraint line to:

rise and the equilibrium quantity to stay the same

If the demand curve for life-saving medicine is perfectly inelastic, then a reduction in supply will cause the equilibrium price to:

Utility

In microeconomic terms, the ability of a good or service to satisfy wants is called:

A measurement of utility

In terms of microeconomic analysis, what is the function of "utls"?

as wages increase over this range, the quantity of hours worked actually decreases.

Refer to the graph above. What is the significance of the point at the top of the backward bending of the supply curve marked L3?

as wages increase over this range, the quantity of hours worked also increases

Refer to the graph above. What is the significance of the point marked L1 at the bottom upward-sloping portion of the individual labor supply (2) curve?

backward-bending supply curves for labor are not typical in the short run

Refer to the graph above. Which of the following statements is true?

Elastic

Supply is said to be ___ when the quantity supplied is very responsive to changes in price.

the manner in which the tax burden is divided between buyers and sellers

Tax incidence is

Substitution effect

The ____ arises when a price changes because consumers have an incentive to consume less of the good with a relatively higher price and more of the good with a relatively lower price.

Price

The elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in:

Increase

The longer the time period considered, the more the elasticity of supply tends to:

with the quantities consumed

The marginal utility of two goods changes

Marginal utility

The term ___ refers to the additional utility provided by one additional unit of consumption.

9

Troy has a part-time job in a book store to help pay for his college. He can work up to 30 hours each week at his job, which pays $9 per hour. The table below shows his utility from different levels of leisure and income. Troy currently works 20 hours per week. If he decides to work 30 hours instead, his marginal utility gain from the additional income is ____.

0 hours and 5 hours of work

Troy's greatest increase in marginal utility in additional income occurs between

Cross price elasticity of demand

What concept is reflected in the following example: the decrease in the price of record players leads to an increase in the purchase of record albums.

Elastic

Youth smoking seems to be more ___ than adult smoking - that is, the quantity of youth smoking falls by a greater percentage than the quantity of adult smoking in response to a given percentage increase in price

each of the above will cause a variation

Which of the following is most likely to cause variation in American household spending patterns? differing levels of family income geographical location of households each household's personal preferences each of the above will cause a variation

$400

With reference to Graph A, at a price of $10, total revenue equals:

$500

With reference to Graph A, at a price of $5, total revenue equals

$200

With reference to Graph B, at a price of $5, total revenue equals:

Inelastic; decreases

Graph B represents a demand curve that is relatively ___. Total revenue ___ as the price decreases from $10 to $5.

Income effect

I am earning $20 per hour; at this rate I have a specific quantity demand for widgets (anything you want it to be). The price of widgets goes up 20%. Which of the following explains my decrease in demand

142

Jacob attends college and works part-time job in a drug store. He can work up to 40 hours each week, and is paid $9 per hour. The table below shows his utility from different levels of leisure and income. If Jacob decides to work 20 hours per week, his total utility from both leisure and income would be:

40

Jacob's smallest increase in marginal utility in additional income occurs at how many hours of work?

responsiveness of quantity demanded to a change in price

The price elasticity of demand measures the:

Fungible

This concept that all money carries equal value to the individual is expressed by this term: