econ midterm lsu

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A consumer is currently spending all of her available income on two goods, cds and dvds. At her current rate, she is spending twice on cds than dvds. If the consumer has $120 of income and is consuming 10 cds and 2 dvds, what is the price of a cd?

$8

A manufacture produces 410 units when the market price is $8 per unit and produces 470. What is the price of elasticity using the midpoint formula?

.61

if 23% change in price results in a 21 % change in quantity supplied, the the price elasticity of supply is about

.91 and supply is elastic

Suppose a tax of $4 per unit is imposed on a good this market, Which of the following is correct?

2/3 of the burden of the tax will fall on buyer, and 1/3 of the burden of the tax will fall on sellers.

Which of the following combinations of beers and bratwurst represents a point that would lie to the interior of the consumer's budget constraint?

40 beers and 50 bratwurst

Suppose the price of elasticity of supply for cheese is .6 in the short run and 1.4 in the long run. If an increase in the demand for cheese causes the price of cheese to increase by 15%, the the quantity supplied will increase by

9% in the short run and 21% in the long run

Bundle J contains...Bundle K....

Bundle J

Which of the following is correct?

Rent control is an example of price ceiling and the min. wage is an example of a price floor.

In which market will majority of the tax burden fall on buyers?

The market shown in graph b.

Indifference curves illustrate

a consumer's preference

A price floor is

a legal minimum on the price at which a good can be sold.

College roommate and noodles

be positive, and you roommate's would be negative.

If the price of water doubles to $6, the the

budget constraint intersects the vertical axis at 36 waters

Demand is said to be price elastic if

buyers respond substantially to changes in the price of the good

price ceilings and price floors that are binding

cause surpluses and shortages to persist because price cannot adjust to the market equilibrium price

Between point A and point B on the graph, demand is

elastic, but not perfectly elastic.

When a tax is placed on the sellers of a product, buyers pay

more and sellers receive less than they did before the tax

If two good are complements, their cross-price elasticity will be

negative

left and right gloves provide a good example of

perfect complements

A legal minimum on the price at which a good can be sold is called a

price floor

rent control

serves as an example of price ceiling

Suppose Jamie can choose between consuming two good. If we observe that Jamie's budget constraint has moved outward, the we know for certain that

she can reach a high indifference curve

For a particular good, a 12% increase in price causes a 3% decrease in quantity demanded. Which of the following statements is most likely key applicable to this good?

the good is a necessity

Cross-price elasticity of demand measures how

the quantity demanded of one good changes in response to a change in the price of another good.

If a price floor is not binding, then

there will be a shortage in the market


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