Econ Test 1

Suppose that Mimi plays golf 5 times per month when the price is $40 and 4 times per month when the price is $50. What is the price elasticity of Mimi's demand curve?

1

Suppose that Bobo purchases 1 pizza per month when the price is $19 and 3 pizzas per month when the price is $15. What is the price elasticity of Bobo's demand curve?

4.25

The demand for a product is unit elastic. At a price of $20, 10 units of a product are sold. If the price is increased to $40, then one would expect sales to equal:

5 units

are enacted when discontented sellers, feeling that prices are too low, appeal to legislators to keep prices from falling.

Price floors

change in price of a good or service typically causes ___________________________ for that specific good or service.

a change along the supply curve

ceteris paribus

all variables except those specified are constant

The nature of demand indicates that as the price of a good increases:

buyers decide to purchase less (demand decreases)

A price cut will increase the total revenue a firm receives if the demand for its product is:

elastic

Youth smoking seems to be more __________ than adult smoking—that is, the quantity of youth smoking will fall by a greater percentage than the quantity of adult smoking in response to a given percentage increase in price.

elastic

The ____________ is the quantity where quantity demanded and quantity supplied are equal at a certain price

equilibrium quantity

If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. This is known as

excess demand

If the demand curve is perfectly elastic, then an increase in supply will:

increase the quantity exchanged but result in no change in the price

demand schedule for a good

indicates the quantities that will be purchased at alternative market prices

Economists refer to the relationship that a higher price leads to a lower quantity demanded as the

law of demand

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

price

The downward slope of the demand curve again illustrates the pattern that as _____________ rises, _________________ decreases.

price, quantity demand

A demand curve shows the relationship between price and _________________ on a graph

quantity demanded

refers to the total number of units purchased at a price

quantity demanded

refers to the total number of units that are purchased at that price

quantity demanded

When economists talk about supply, they are referring to a relationship between price received for each unit sold and the

quantity supplied

price elasticity demand measures

responsiveness of quantity demanded to a change in price

If new manufacturers enter the computer industry, then (ceteris paribus)

supply curve shifts to the right

Price elasticity of demand is defined as

the percentage change in quantity demanded divided by the percentage change in price.

scarcity exists because of

unlimited wants and limited resources

unit elastic demand

when the quantity demanded changes at the same proportion as the price

normative statement

where philosophers draw distinction between positive statements