micro quiz questions to study

examples of either-or decisions

-after graduation from law school, frank is offered one job in Chicago and another in New York. where should frank work? -bella is accepted to 4 graduate school programs. where should she go to school?

new outfits are what kind of good? elasticity?

a normal good with income-inelastic demand

complements are

negative

substitutes are

positive

normal goods

positive (+) income elasticity

vacations are what kind of good?

normal good

Supply in the market for cat food is

less elastic than supply in the market for snake oil.

Demand for a luxury item tends to be

more elastic

Demand for an item that uses a large portion of your budget tends to be

more elastic

Over longer periods of time, demand tends to be

more elastic

inferior goods

negative (-) income elasticity

examples of a shift in the demand curve

-College students purchase many more energy drinks during finals week than during the rest of the semester. -Students eat out more often as the federal government increases how much grant money it provides students.

examples of movement along the demand curve

-College students reduce how much detergent they use for each load of laundry in response to higher detergent prices. -College students rush and buy discount furniture to take advantage of an unexpected price drop.

examples of marginal decisions ("how much")

-jake needs to stay awake while he studies for his midterm tomorrow. what quantity of coffee should jake drink? -marvin arrives at his favorite buffet to eat chinese food. sometimes, he overeats and leaves the buffet with a stomach ache

Rent controls are a typical example of a price ceiling. What are all likely consequences of rent controls when the price ceiling is binding?

-reductions in apartment quality -black markets -inefficient allocation of apartments -more subletting of apartments

If a 25% price increase for Product A causes a 10% decrease in its quantity demanded, but no change in the quantity demanded for Product B, what is the cross-price elasticity of these goods? Round your answer to one decimal place.

0, no relationship

Determine how the equilibrium price and equilibrium quantity in the market for coffee changes if: -the price of tea, a substitute for coffee, decreases, -and due to better weather, the price of coffee beans also decreases.

Equilibrium price decreases, and equilibrium quantity may increase, decrease, or stay the same.

The U.S. government has subsidized ethanol production since 1978. With the advent of affordable electric cars, policymakers are considering whether to allow the subsidy to expire. The accompanying graph represents the market for ethanol. Move the supply and/or demand curves to show how reducing the subsidy will affect the ethanol market.

Equilibrium price increases equilibrium quantity decreases

Stone and brick are substitutes in home construction. Consider the market for bricks depicted in the graph. Suppose the price of stone increases due to new regulations for the stone quarrying industry. Illustrate the impact this will have on the market for bricks.

Equilibrium price increases equilibrium quantity increases

money

allows for the exchange of goods and services using a common unit as a measure of value that is generally accepted as payment

markets

brings buyers and sellers together to carry out mutually beneficial exchanges

Assume Fiona is willing to pay $8 for a pizza cutter. Tim also wants one, but is only willing to pay $6 for one. At a pizza baker's convention, Fiona buys the last pizza cutter at the market price just before Tim can buy it. Tim contacts the convention organizers and complains about missing out on the last pizza cutter. The organizers refund Fiona for the pizza cutter and allow Tim to buy it at the market price. What happens as a result of the organizers refunding Fiona, taking the pizza cutter from her, and letting Tim buy it at the market price?

consumer surplus decreases

What is the biggest problem facing Command Economies (socialism)?

coordination and incentives to direct output

as a good, vacations are....(elasticity)

income-elastic

as a good, generic potato chips are...(elasticity)

income-inelastic

In the long run, the surplus caused by a price floor on hay is likely to

increase because farmers will increase the amount of land used to grow hay.

generic potato chips are what kind of good?

inferior good

With fewer substitutes, demand tends to be

less elastic

Recently, a series of studies have demonstrated the considerable beneficial health effects of food and drink derived from the amaranth plant. This has affected consumer tastes for amaranth flour, pods, root, etc. At the same time, particularly favorable weather has resulted in a bumper crop of amaranth plants. Show the impact of these changes by properly shifting the appropriate curve or curves in the graph.

both supply and demand shift right

property rights

established rules for ownership of resources and creates incentives for innovation

Suppose the accompanying graph depicts a market for one pound bags of candy. Place the line labeled Excess Demand at a price that would generate an excess demand (shortage). Then, determine the size of the excess demand.

excess demand= 4 million bags

firms

organizes resources in order to produce goods and services

Look at the table Taxes, Spending, and Income. Suppose Governor Meridia's decides to initiate a state tax of 5% on all sales. This tax will be

regressive