Micro economics unit 2

If the price elasticity of supply for pickles is 2 and the price of pickles increases by 10 percent, then the quantity supplied of pickles will increase by

20%

Which of the following will shift the supply curve for apples to the right?

A decrease in the rental price for apple harvesting equipment

Which of the following best illustrates the concept of consumer surplus?

A thirsty athlete pays $0.85 for a cold drink when she would have gladly paid $1.50 for the drink.

Assume that the market for beef is perfectly competitive and in equilibrium. Which of the following would most likely result in an increase in both the equilibrium price and the equilibrium quantity of beef?

An increase in the supply of potatoes, a complementary good

In the rental housing market, what would be the effect of a rent control that was set at the market equilibrium rental price?

It would have no impact on the number of housing units available.

Assume that the current market equilibrium price for milk is $2.80 per gallon and that 5 million gallons are sold per day. If the government sets a price ceiling of $2.00 per gallon, which of the following is true?

Less than 5 million gallons of milk will be sold.

All of the following cause a rightward shift in the demand schedule for a normal good EXCEPT

a decrease in the price of the good

The demand curves X and Y are shown in the graph above. Which of the following offers the most accurate comparison of the price elasticities of demand curves X and Y at a price of $4?

Demand Curve X Relatively inelastic Demand Curve Y Perfectly elastic

Question Country Z has a downward sloping domestic demand curve and an upward sloping domestic supply curve for widgets. In the absence of trade, the domestic price of widgets is P0. Now the country engages in trade, and the price for widgets, Pw, is below the domestic price, P0. Which of the following will occur?

Domestic producer surplus will decrease in country Z.

If a 10 percent increase in the price of good X results in a 20 percent decrease in the quantity of good Y demanded, which of the following is true?

Good X and good Y are complementary goods, and the cross-price elasticity is −2 .

The graphs above show Mary's demand for hamburgers and Mark's demand for hamburgers. Suppose Mary and Mark are the only two consumers in the market. Which of the following is a point on the market demand curve for hamburgers?

Price $4 Quantity 7

If a hurricane reduced the crab population, the price of crabs and quantity sold would change in which of the following ways?

Price Increase Quantity Decrease

Which of the following relationships among the price elasticity of demand, change in price, and change in total revenue is consistent?

Price elasticity of demand: inelastic Change in price: decrease Change in total revenue: decrease

The diagram above depicts the demand and supply curves for good Y. The perfectly competitive market is initially in equilibrium, but the government decides to institute a price floor program by setting the price of good Y at PF and agrees to purchase all unsold units of good Y from the producers. The cost of this program to the government is represented by which of the following areas?

Q1IKQ3

A change in which of the following will cause a change in the supply of personal computers (PC's) in the short run?

Technology

In a perfectly competitive market, a change in which of the following could cause a shift in the supply curve?

Technology

Question Which of the following describes how a market will respond when the scarcity of a good increases?

The price of the good will increase.

Assume that more corn is used to produce ethanol. Simultaneously, more effective control of pests and weeds occurs in farming. Which of the following will definitely occur in the corn market?

The quantity of corn will increase.

The economic concept of total consumer surplus refers to which of the following?

The sum of the differences between the prices that consumers are willing to pay for a good or service and the price they actually pay

If the demand for product X is perfectly elastic and the supply of product X decreases, which of the following will occur in the market for X ?

Total revenue will decrease.

An increase in the supply of good X resulted in an increase in the price and quantity of good Y. It can be concluded that good Y is

a complement for good X

The absolute value of the price elasticity of demand for a good increases when

consumers spend greater portion of their budget on the good

For a normal good, the income effect of a price change refers to the change in the consumption of the good that occurs because of the change in

consumers' purchasing power

Question To determine whether two goods are complements, one would calculate the

cross-price elasticity of demand

Suppose that the demand for vegetables is price elastic. If the price of vegetables increases by 5 percent, the quantity of vegetables demanded would

decrease by more than 5 percent

The quantity of peanuts supplied increased from 40 tons per week to 60 tons per week when the price of peanuts increased from $4 per ton to $5 per ton. The price elasticity of supply for peanuts over this price range is

elastic

Carmen consumes both entertainment and medical care. For Carmen, entertainment is a normal good, and the income elasticity of her demand for medical care is zero. If Carmen's income increases, which of the following will be the immediate impact on her consumption?

entertainment increase medical care no change

Given the demand curve above, if price decreases from $8 to $4 per unit, total consumer surplus will

increase by $18

A 10 percent increase in Sandra's income causes Sandra's consumption of milk to decrease from 10 cartons to 6 cartons. Sandra's income elasticity of demand for milk is

less than zero and therefore milk is an inferior good

Assume that the supply of corn is relatively price inelastic, while the demand for corn is relatively price elastic. If the government imposes a per-unit excise tax on the production of corn, the incidence of the tax will fall

more on sellers than on buyers

If the government imposes a tariff on imports of cheese, the price and quantity of imported cheese will most likely change in which of the following ways?

price increase quantity decrease

An effective minimum wage policy in a competitive market will increase unemployment and increase the total earnings of labor only if the demand for labor is

relatively inelastic

If a one-of-a-kind Etruscan vase is offered for sale at an auction, which, if any, of the following correctly shows the supply curve for the vase?

vertical straight line