Econ #1 Test
Which of the following would not shift the demand curve for mp3 players?
a decrease in the price of mp3 players
An increase in the price of a good will
decrease quantity demanded
A decrease in the price of a good will
decrease quantity supplied
Other things equal, the demand for a good tends to be more inelastic, the
fewer the available substitutes.
A decrease in demand is represented by a
leftward shift of a demand curve.
Demand is inelastic if the price elasticity of demand is
less than 1
A production possibilities frontier is a straight line when
the rate of tradeoff between the two goods being produced is constant
Which of the following is not a determinant of the demand for a particular good?
the prices of the inputs used to produce the good
Which of the following expressions is valid for the price elasticity of demand?
(Q2-Q1) / (Q2+Q1)/2] / (P2-P1) / [(P2+P1)/2]
Which of the following could be the cross-price elasticity of demand for two goods that are complements?
-1.3
If the price elasticity of demand for a good is 5, then a 10 percent increase in price results in a
50 percent decrease in the quantity demanded.
Suppose the incomes of buyers in a market for a particular normal good decrease and there is also a reduction in input prices. What would we expect to occur in this market?
Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous
Kelly and David are both capable of repairing cars and cooking meals. Which of the following scenarios is not possible?
Kelly has a comparative advantage in repairing cars and in cooking meals.
Music compact discs are normal goods. What will happen to the equilibrium price and quantity of music compact discs if musicians accept lower royalties, compact disc players become cheaper, more firms start producing music compact discs, and music lovers experience an increase in income?
Quantity will rise, and the effect on price is ambiguous
When we move along a given demand curve
all non price determinants of demand are held constant.
When demand is elastic, a decrease in price will cause
an increase in total revenue.
The most obvious benefit of specialization and trade is that they allow us to
consume more goods than we otherwise would be able to consume.
Which of the following is likely to have the most price inelastic demand?
cookies
Two goods are substitutes when a decrease in the price of one good
decreases the demand for the other good.
The law of demand states that, other things equal, when the price of a good
falls, the quantity demanded of the good rises.
If a decrease in income increases the demand for a good, then the good is a(n)
inferior good
"Other things equal, when the price of a good rises, the quantity supplied of the good also rises, and when the price falls, the quantity supplied falls as well." This relationship between price and quantity supplied
is referred to as the law of supply
On a downward-sloping linear demand curve, total revenue reaches its maximum value at the
midpoint of the demand curve.
Comparative advantage is related most closely to which of the following?
opportunity cost
Danita rescues dogs from her local animal shelter. When Danita's income rises by 7 percent, her quantity demanded of dog biscuits increases by 12 percent. For Danita, the income elasticity of demand for dog biscuits is
positive, and dog biscuits are a normal good.
When drawing a demand curve
price is measured along the vertical axis, and quantity demanded is measured along the horizontal axis
The price elasticity of demand measures how much
quantity demanded responds to a change in price
When each person specializes in producing the good in which he or she has a comparative advantage, total production in the economy
rises
Wheat is the main input in the production of flour. If the price of wheat decreases, then we would expect the
supply of flour to increase.
The opportunity cost of an item is
what you give up to get that item
The quantity demanded of a good is the amount that buyers are
willing and able to purchase.