Micro Exam 1
Which of the following demonstrates the law of demand?
Ashlyn buys more donut holes at $0.25 per donut hole than at $0.50 per donut hole, other things equal
When the government implements programs such as progressive income tax rates, which of the following is likely to occur?
Equality is increased and efficiency is decreased
A monopoly is a market with one
seller, and that seller sets the price
Table 4-1. If the law of demand applies to this good, then Q1 could be
120
Figure 5-3. Using the midpoint method, between prices of $70 and $80, price elasticity of demand is about
3.00
If the price elasticity of supply is 0.6, and a price increase led to a 3.7 percent increase in quantity supplied, then the price increase is about
6.17 percent
Which of the following changes would not shift the demand curve for a good or service?
A change in the price of the good or service
Figure 5-6. Along which of these segments of the supply curve is supply most elastic?
AB
A hair stylist currently cuts and colors hair for 50 clients per week and earns a profit. He is considering expanding his operation in order to serve more clients. Should he expand?
It depends on the marginal cost of serving more clients and the marginal revenue he will earn from serving more clients
Suppose the US had a short-term shortage of farmers. Which market mechanisms would adjust to remove the shortage?
The prices of food and the wages of farmers would adjust
Which of the following changes would not shift the supply curve for a good or service
a change in the price of the good or service
Suppose scientists provide evidence that people who drink energy drinks are more likely to have a heart attack than people who do not drink energy drinks. We would expect to see
a decrease in the demand for energy drinks
A group of buyers and sellers of a particular good or service is valled
a market
Figure 4-4. The movement from point A to point B on the graph is caused by
an increase in the price of the good
Table 5-2. Using the midpoint method, if the price falls from $160 to $210, the price elasticity of demand is
elastic
The terms equality and efficiency are similar in that they both refer to benefits to society. However they are different in that
equality refers to uniform distribution of those benefits and efficiency refers to maximizing benefits from scarce resources
Large or persistent inflation is almost always caused by
excessive growth in the quantity of money
Suppose the cross-price elasticity of demand between peanut butter and jelly is -2.50. This implies that a 20 percent increase in the price of peanut butter will cause the quantity of jelly purchased to
fall by 50 percent
Instead of conducting laboratory experiments to generate data to test their theories, economists often
gather data from historical episodes of economic change
Microeconomics is the study of
how individual households and firms make decisions
A gardener has the ability to grow either apples or pears or some combination of the two. Given no other information, it follows that the gardener's opportunity cost of a pound of apples multiplied by his opportunity cost of a pound of pears
is equal to 1
Another term for goods and services is
output
In the circular-flow diagram, which of the following is not a factor of production
output
Market power refers to the
power of a single person or small group to influence market prices
What term refers to the idea that society has limited resources and therefore cannot produce all the goods and services people wish to have?
scarcity
In a market economy, economic activity is guided by
self-interest and prices
