Econ Test #2 HW
Getting cash out of an ATM is allocated well by ________. Domino's delivers pizzas to a student dorm is allocated well by______.
first-come, first-served; market price
A student takes a book from the libary without signing it out is allocated well by _______. Jane and Gary decide to wed is allocated well by _______.
force personal characteristics
When a subsidy is paid to potato growers, the market equilibrium quantity of potatoes ______ and market price ______.
increases; falls
The fewer the substitutes for a good or service, the more ______ is the demand for it. The smaller the proportion of income spent on a good, the more ______ is the demand for it.
inelastic; inelastic
Nick can purchase each milkshake for $2. For the first milkshake purchased Nick is willing to pay $4, for the second milkshake $3, for the third milkshake $2 and for the fourth milkshake $1. What is the value of Nick's consumer surplus?
$3
Suppose there are four firms that are each willing to sell one unit of a good. Each firm has a different minimum price that they are willing to sell for: Firm A $6, Firm B $7, Firm C $10, and Firm D $12. If the market price is $11 then the market supply for this good will be
3 units
Which of the following statements is an example of elasticity of supply?
A 10 percent fall in the price of turkey with no other change decreases quantity supplied by 12 percent.
Which of the following statements illustrates income elasticity of demand?
A salary cut and no other changes has resulted in Mary buying less fast food.
Which of the following statements describes cross price elasticity of demand?
As a result of a rise in the price of spinach with all else remaining constant, Ralph buys more broccoli, a substitute for spinach.
The big tradeoff is a tradeoff between
efficiency and fairness.
Choose the statement that is incorrect.
Elasticity is reported as a negative number because a positive change in price brings a positive change in the quantity demanded.
In a day in the life of Jack, the following four things occur. Which is an example of resources being allocated by the command system?
His manager at McDonalds puts him on the drive-through window.
Which of the following statements describes an elastic demand?
Mary's quantity demanded of milk decreased by 8 percent when the price of milk rose by 5 percent.
Which of the following statements describe an inelastic demand?
Megan did not buy too many hockey tickets even though their price dropped by 10 percent.
The idea of fairness that has been developed to deal with the big tradeoff is the idea that ______.
fair distribution of the economic pie is the one that makes the poorest person as well off as possible
Which method is used to allocate a free on dash street parking spot?
first come first serve
Which of the following statements is FALSE? I. The maximum price people are willing to pay for one more unit of a good is its value. II. The value of one more unit of a good is the good's marginal benefit. III. good's marginal benefit is the maximum price people are willing to pay for another unit.
None of the above because all the statements are true.
For Product X, the income elasticity of demand is 1.16. Which of the following is therefore definitely true?
Product X is income elastic.
Which of the following statements is an example of perfectly elastic demand?
Sherry is overwhelmed with buyers of her peaches when she lowers their price by a penny a pound compared to other sellers in the farmers' market.
Public transit ridership was down in 2016 in most U.S. cities. Uber rides increased and gas prices fell. In some cities, transit service became unreliable. Explain the elasticities of demand implicitly referred to in the news clip.
The cross elasticity of demand for public transit rides with respect to the price of gasoline and the cross elasticity of demand for Uber rides with respect to the price of gasoline
Which of the following best describes a subsidy?
The government pays farmers $100 per ton of wheat produced.
Which of the following statements best describes search activity?
Tim spends time looking for jobs and sending applications to firms.
Which of the following statements describes a perfectly inelastic demand?
Walgreens does not find any change in the number of people buying chlorthalidone after a 7 percent rise in its price.
Which of the following is an example of price elasticity of demand?
When the price of bananas increased by 5 percent and nothing else changed, the quantity of bananas demanded decreased by 2 percent.
At Aladdin's Cave, a restaurant near the University of California San Diego, reservations are recommended. Aladdin's Cave allocates scarce table resources by _______.
first-come, first-served
The demand for plums is unit elastic if _____.
a 5 percent rise in the price of plums results in a 5 percent decrease in the quantity of plums demanded
A rent ceiling is _______.
a government regulation that makes it illegal to charge a rent higher than a specified level
A minimum wage is _______.
a price floor in the labor market
What are the characteristics of an allocation of scarce resources by market price? When a market price allocates a scarce resource, the people who ______ get the resource.
are willing and able to pay that price
For which of the following pairs of goods is the cross elasticity of demand positive?
beef and chicken
Which of the following statements about supply curves is correct? I. A supply curve also can be a marginal cost curve. II. A supply curve tells the quantity of other goods and services that sellers must give up to produce another unit of the good.
both I and II
The shorter the time that has elapsed since a price change, the more _______.
demand is inelastic
In 2012, a severe drought raised the price of corn. For a farmer in Canada who harvested a normal crop because the farm was not affected directly by the drought, the increase in the price of corn
increases the farmer's producer surplus.
If the total revenue received by sellers of DVDs increases by 20 percent when price increases by 10 percent, then demand for DVDs is
inelastic
For baseball card collectors, Babe Ruth baseball cards from 1927 would most likely have a perfectly
inelastic supply.
A rent ceiling set above the equilibrium rent _______.
is ineffective
The supply of lettuce in the short run will be ________ than the supply in the long run and ________ than the supply today.
less elastic; more elastic
At the current level of output, the marginal social benefit of pizza exceeds the marginal social cost of pizza. Compared to the allocatively efficient quantity, we are producing too ________ pizza and too ________ of other goods.
little; much
Which method is used to allocate airline tickets on the eve of Thanksgiving?
market price
Which method is used to allocate rooms in Aspen during ski season?
market price
When the competitive market is using its resources efficiently, the
sum of the total amount of consumer surplus plus the total amount of producer surplus is maximized.
If a shift in the demand curve that raises the price of oranges from $7 to $9 a bushel increases the quantity of oranges supplied from 4,000 bushels to 6,000 bushels, the
supply of oranges is elastic.
If a rise in the price of oranges from $7 to $9 a bushel, caused by a shift of the demand curve, increases the quantity of bushels supplied from 4,500 to 5,500 bushels, the
supply of oranges is inelastic.
Calculate the percentage change in price by...
taking the difference between the two prices divided by the average price
The elasticity of supply does NOT depend on
the fraction of income spent on the product.
The price elasticity of demand is calculated by...
the percentage change in quantity demanded divided by the percentage change in price
Producer surplus is ______.
calculated as the price received for a good minus its minimum supply-price, summed over the quantity sold
If the cross elasticity of demand for golf clubs with respect to the price of a golf lesson is negative, then golf clubs and golf lessons are ______.
complements
At the current quantity of pizza, the marginal social benefit is greater than the marginal social cost. Then
more pizzas must be produced to reach the efficient level.
When an electric utility does not consider the cost of pollution that arises from electricity production, the result is ___________
overproduction
The elasticity of supply for paintings by Monet is
perfectly inelastic
A minimum wage is a _______ applied to labor markets.
price floor
Producer surplus is the _____ a good or service, in excess of the _____ of producing it, summed over the quantity produced.
price of; marginal cost
The income elasticity of demand is a measure of the responsiveness of the
quantity of a good demanded to changes in income.
Demand is price elastic if a
relatively small price increase leads to a relatively large decrease in the quantity demanded
The factors that influence the elasticity of supply are _______.
resource substitution possibilities and the time frame for the supply decision
Demand is elastic when a price ________ results in total revenue ________.
rise, decreasing
If the cross elasticity of demand for a donut with respect to the price of a chocolate chip cookie is positive, then donuts and chocolate chip cookies are ______.
substitutes
Calculate the percentage change of quantity demanded by...
taking the difference between the two quantities divided by the average quantity
Rain spoils the strawberry crop, the price of strawberries rises from $6 to $8 a box, and the quantity demanded decreases from 600 to 200 boxes a week. Over the price range of $6 to $8, the price elasticity of demand is
-3.5
A rise in the price of sushi of from 98cents to $1.02 a piece decreases the quantity of soy sauce demanded form 101 units to 99 units an hour and decreases the quantity of sushi demanded by 1 percent an hour. The price elasticity of demand for sushi is ______ The cross elasticity of demand for soy sauce with respect to the price of sushi is _______
.25 -.50
A 10 percent decrease in income decreases the quantity demanded of pizza by 3 percent. The income elasticity of demand for pizza is
0.3
Suppose the quantity of gasoline is measured in gallons and the price of gasoline is measured in dollars. The price elasticity of demand is 0.67. If the price of gasoline was now measured in cents rather than dollars, the price elasticity of demand would now be
0.67
Taco Bell's economists determine that the price elasticity of demand for their tacos is 2.0. So, if Taco Bell raises the price of its tacos by 6.0 percent, the quantity demanded will decrease by ________ percent.
12
Which of the following statements illustrates a rent ceiling?
Bluestone Properties is permitted to charge a rent of $2,350 for 2-bedroom apartments that would rent for $2,500 in an unregulated market.
Suppose a price ceiling is set below the equilibrium price in the market for gasoline. If initially the market is in equilibrium, then the price ceiling ______ the quantity of gasoline supplied and ______ the quantity of gasoline demanded.
decreases; increases
Resource use is efficient when production is such that marginal social benefit is
equal to marginal social cost.
In the market for potatoes, the marginal social cost _______ marginal social benefit.
exceeds
The price elasticity of supply of laptop computers equals 1.5 if
for every 1 percent that laptop prices increase, computer makers produce another 1.5 percent laptops.
A decrease in tuition fees will decrease your college's total revenue if the price elasticity of demand for college education is ______.
greater than zero and less than 1
Which of the following is an example of a black market transaction? Annie rents an apartment _____.
in a rent-controlled city by paying $1,000 for an extra set of keys
If your annual income rose by 10 percent and you increased your purchases of shoes from 2 pairs to 3 pairs each year, then your demand for shoes is
income elastic.
An advance in technology lowers the price of a laptop. If the demand for laptops is price inelastic, the quantity of laptops sold will ______ and total revenue will ______.
increase; fall
The elasticity of supply is calculated by dividing ______ by ______.
the percentage change in the quantity supplied; the percentage change in the price
Elasticity of supply measures the responsiveness of the quantity supplied to a change in ______, when all other influences on selling plans remain the same
the price of a good
Restaurants don't use market price to allocate their tables because _______.
the price of a table would fluctuate hourly, customer uncertainty would deter patrons, and lower demand would bring lower profit
One of the factors that makes the demand for gasoline inelastic is _______.
the small percentage of income spent on gasoline
If the price of milk increased by 5 percent because of an increase in the demand for milk and the quantity of milk supplied increased by 7 percent,
the supply elasticity of milk is greater than one.
The moral principle at the center of all major religions is _______.
the symmetry principle
The principle that states that we should strive to achieve the greatest happiness for the greatest number is called
utilitarianism
Underproduction of good ________ create a deadweight loss and overproduction of a good ________ create a deadweight loss.
will; will
At Chez Panisse, a restaurant in Berkeley, reservations are essential. At Eli Cannon's, a restaurant in Middletown Connecticut, reservations are not accepted. Chez Panisse allocates scarce table resources by ______ and Eli Cannon's allocates scarce table resources by ______.
first-come, first-served; first-come, first-served
A production quota is ______ because at the quantity produced ______.
inefficient; marginal social benefit exceeds marginal social cost
The demand for corn increases. As a result, the price of corn will ________, and the less elastic the supply of corn, the ________ will be the effect on the price.
rise; greater