Problem sets 1.1-1.5

An increase in the demand for computers brings a

rise in the price of a computer and an increase in the quantity of computers supplied.

Spam is

an inferior good because as the income available to buy meat decreases, consumers buy more Spam

An economic model _____. An example of a model is _______.

Is simpler than the reality it describes; a roadmap

Which of the following is an example of perfectly elastic demand

Sherry is overwhelmed with buyers of her peaches when she lowers her price by a penny a pound compared to other sellers in the farmers market

example of an income elastic good is

a haircut

If a price cut increases total revenue

demand is elastic

The quantity demanded of a good or service is ________

measured as an amount per unit of time

A supply curve________

tells us the lowest prices at which someone is willing to sell

In the market for chocolate bars, the supply of chocolate bars will increase if ____________

the number of chocolate manufactures increases

Which of the following statements describes a perfectly inelastic demand

Walgreens does not find any changes in the number of people buying chlorthalidone after a 7% rise in its price

If, as Betsy's income decreases, her demand for hamburgers increases, then for Betsy, hamburgers are ___________

an inferior good

A decrease in the supply of ramen noodles brings a

shortage of the ramen noodles at the original price and a rise in their price

A demand curve that illustrates the law of demand______

shows that the quantity demanded increases as the price falls

a hydroelectric dam is an example of __________

capital

P=800-25Qd; P=50+5Qs

800-25Q=50+5Q 750-25Q=5Q 750=30Q Qe=25 800-25(25) 800-625 Pe=175

P=900-20Qd P=600+10Qs

900-20Q=600+10Q 300-20Q=10Q 300=30Q Qe=10 900-20(10) 900-200 Pe=700

If the cross elasticity demand for ski trips with respects to price of a ski jacket is negative, then ski trips and ski jackets are

complements

If, as the prices of a gym membership increases, the quantity of bottled water that people buy decreases, then gym memberships and bottled water are _________

complements

A substitute is a good that is

consumed in the place of another good

In January 2010, the price of gasoline was $2.70 a gallon. By spring 2010, the price had increased to $3.00 a gallon. Assume that there was no changes in average income, population, or any other influence on buying plans. Explain how the rise in the price of gasoline would effect a. the demand for gasoline b. the quantity of gasoline demanded

Given the law of demand you would expect the rise in the price of gasoline to decrease the quantity of gasoline demanded and not change the demand for gasoline

How do the earnings of economics majors compare with other majors? Economics majors earn________

Less than chemical engineering majors and applied mathematics majors but more than most other majors

change in quantity demanded (chicken)

People are buying less chicken because the price of beef has fallen People are buying less chicken because the price of chicken has increased People are buying more chicken because the price of chicken has fallen

Change in demand (chicken)

The cost of chicken feed has increased

Dan says that a 12% increase in the price of a newspaper will decrease the quantity of newspapers demanded by 10%

The demand for newspapers is inelastic

Taking a smartphone to the gym when you work out becomes more popular. What is the result?

The demand for smartphones increases

The price of a music-streaming subscription falls. What is the effect on the price and quantity of smartphones?

The equilibrium quantity of smartphones increases and the equilibrium price rises

You can stay in school or you can quit school and get a full-time job. You have an incentive to stay in school if________

The marginal benefit from staying in school is greater than the marginal cost of staying in school

Why does demand not change when the price of a good changes with no change in the other influences on buying plans? Consider the demand for onions. The demand for onions does not change when a change in ________ occurs

The price of onions

Demand is ________, when all other influences on buying plans remain the same.

The relationship between the quantity demanded of a good and the price of the good

choose the correct statement

Total revenue from the sale of a good equals the price of the good multiplied by the quantity sold

As the price of candy bars increases from 1, to 1.25, to 1.50, William continues to buy candy bars every week

Williams demand for candy bars is perfectly inelastic

If, as Betsy's income increases, her demand for fitness club membership increases, then for Betsy, fitness club membership is

a normal good

A good with an income elasticity greater than one is

a normal good that is income elastic

A good with an income elasticity that is positive and less than 1 is

a normal good that is income inelastic

A good with an income elasticity that is negative is

an inferior good

When the price of tomatoes rises from​ $3 per pound to​ $4 per​ pound, the quantity of tomatoes sold decreases from 15 pounds to 10 pounds. Total revenue​ _____, and using the total revenue test​, we can determine that the demand for tomatoes is​ _____ .

decreased from 45 to 40 and elastic

An increase in the price of onions __________

decreases the quantity of onions demanded and results in a movement up along the demand curve for onions

If a price cut decreases total revenue

demand is inelastic

if a price cut leaves total revenue unchanged

demand is unit elastic

If the quantity of dental services chemical increases by 15 percent when the price of dental services falls by 10%, is the demand for dental services inelastic, elastic or unit elastic

elastic

The closer the substitute for a good or service, the more

elastic is demand

The greater the proportion of income spent on a good, the more

elastic is demand

The longer the time has elapsed since a price change, the more

elastic is demand

Demand for luxury is more

elastic than a demand for necessity because a luxury has more substitutes

a hairdresser who operates out of her come is an example of___________

entrepreneurship

example of an income inelastic good is

food

A decrease in tuition fees will decrease your college total revenue if the price elasticity of demand for college education is

greater than 0 and less than 1

The law of demand states that other things remaining the same the__________ the price of a good the _________

higher, smaller the quantity demanded

An advance in technology lowers the price of a laptop If the demand for laptops is price inelastic, the quantity of laptops sold will

increase and total revenue will fall

As the average income in China continues to increase, explain how the following will change A.the demand for beef B.the demand for rice

increase if beef is normal good decrease if rice is an inferior good

The shorter the time that has elapsed since a price change, the more

inelastic is demand

The fewer the substitutes for a good or service, the more

inelastic is the demand for it

The smaller the proportion of income spent on a good, the more

inelastic is the demand for it

Webster Dictionaries and Oxford Dictionaries are almost perfect substitutes. The price elasticity of demand for Webster Dictionaries

is almost infinity

Factors of production are grouped into four categories, which are ___________

land, labor, capital, and entrepreneurship

Ski trips and ski jackets are compliments The cross elasticity of demand for ski trips with respect to the price of a ski jacket is

negative

The income elasticity of demand for Spam is

negative because as income falls, the quantity of Spam demanded increases

The quantity demanded of a good or service is______________

not necessarily the same as the quantity actually bought

The price elasticity of demand is calculated by dividing the

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

A complement is a good that is

produced with another good

A demand curve shows the relation between the _______ and _______ when all other influences on buying plans remain the same

quantity demanded of a good; its price

The supply curve shows the relationship between:

quantity supplied of a good and price

Economics is the _______ the choices that individuals, business, governments, and entire societies make as they______, and the influences on those choices the arrangements that coordinate them.

social science that studies; cope with scarcity

If the cross elasticity of demand for pasta with respect to the price of pizza is positive, then pasta and pizza are

substitutes

If, as the price of a meal at Taco Bell decreases, the quantity of meals at Pizza Hut that people buy decreases, then meals at Taco Bell and meals at Pizza Hut are ____________

substitutes

Taking a smartphone to the gym when you work out become less popular. What is the result?

the demand for smartphones decreases

The expected prices of a smartphone next year falls. What is the result

the demand for smartphones today decreases

The expected price of a smartphone next year rises. What is the result?

the demand for smartphones today increases

The price elasticity of demand is a units-free measure of the responsiveness of_______

the quantity demanded of a good to a change in its price when all other influences on buying plans remain the same

If the price of a granola bar falls, with all other influences on buying plans remaining the same, in the market for granola bars ________

the quantity of granola bars demanded increases

If the price of a smartphone rises, with all other influences on buying plans remaining the same, in the market for smartphones ________

the quantity of smartphones demanded decreases

If the price of sunscreen falls, with all other influences remaining the same, in the market for sunscreen _____________

the quantity of sunscreen demanded increases

Supply is ________ when all other influences on buying plans remain the same

the relationship between the quantity supplied of a good and the price of a good

By remaining in school, you are paying an opportunity cost that includes ____________

the wages you could earn if you took a job

By remaining in school, you are paying an opportunity cost that includes

time you could have been playing soccer instead of studying