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what is the difference between an "increase in demand" and an "increase in quantity demanded"?
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an "increase in demand" is represented by a rightward shift of the demand curve while an "increase in quantity demanded" is represented by a movement along a given demand curve
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The law of demand implies, holding everything else constant, that as the price of bagels increases,
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the quantity of bagels demanded will decrease
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Which of the following will shift the demand curve for a good?
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a decrease in the price of a complementary good
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if an increase in income leads to a decrease in the demand for popcorn, then popcorn is
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an inferior good
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suppose that when the price of raspberries increases, Lonnie increases his purchases of papayas. To Lonnie,
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raspberries and papayas are substitutes
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Technological advances have resulted in lower prices for smartwatches. What is the impact of this on the market for traditional watches?
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The demand curve for traditional watches shifts to the left
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An ---- is represented by a leftward shift of the demand curve while a(n) --- is represented by a movement along demand curve
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decrease in demand; increase in quantity demanded
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What is the difference between an "increase in supply ' and an "increase in quantity supplied"?
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an "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" refers to a movement along a given supply curve in response to an increase in price
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in October, the market analysis predicts that the price of platinum will fall in November. What happens in the platinum market in October, holding everything else constant?
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The supply curve shifts to the right
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An increase in price of inputs would be represented by a change from
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s2 to s1
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An increase in the number of firms in the market would be represented by a movement from
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s1 to s2
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An increase in the price of substitutes in production would be represented by a movement from
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s2 to s1
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A decrease in the price of the product would be represented by a change from
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B to A
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A decrease in productivity would be represented y a change from
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s2 to s1
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Which of the following would shift the supply curve from MP3 players to the right?
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a decrease in the price of an input used to produce MPS players
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Which of the following would shift the supply curve for MP3 players to the left?
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an increase in the price of input used to produce MP3 players
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At a products's equilibrium price
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the product's demand curve crosses the product's supply curve
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if the price is $10
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there would be a shortage of 600 units
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at a price of $10, how many units will be sold
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200
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if the current market price is $10, the market will achieve equilibrium through
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a price increase, increasing the quantity supplied and decreasing the quantity demanded
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Let D= demand, S = supply, P = equilibrium price, and Q= equilibrium quantity. What happens in the market for walnuts if the center for disease control and prevention announces that consuming a half cup of walnuts each week helps to lower bad levels of cholesterol?
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D increases, S no change, P and Q increase
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Assume that both the demand curve and the supply curve for MP3 players shift to the right but the demand curve shifts more than the supply curve. As a result
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both the equilibrium price price and quantity of MP3 players will increase
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Assume that both curve the demand and the supply curve for MP3 players shift to the right but the supply curve shifts more that the demand curve. As a result
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the equilibrium price of MP3 players will decrease; the equilibrium quantity will increase
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Assume that the demand curve for MP3 players shifts to the right and the supply curve for MP3 players shifts to the left, but the supply curve shifts less than the demand curve. As a result
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The equilibrium price of MP3 and the quantity of MP3 Players will increase.
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Assume that the demand curve for MP3 players shifts to the right and the supply curve shifts less than the demand curve. As a result
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both the equilibrium price and quantity of MP3 players will increase
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Which of the following statements is true?
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An increase in demand causes a change in equilibrium price; the change in price does not cause a further change in demand or supply
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which of the following statement is true?
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An increase in supply causes a change in equilibrium price; the change in price does not cause a further change in demand or supply
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The difference between the highest price a consumer is willing to pay for a good and the price the consumer actually pays is called
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consumer surplus
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Willingness to pay measures
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the maximum price that a buyer is willing to pay for a good
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Marginal cost is
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the additional cost to a firm of producing one more unit of a good or service
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The total amount of producer surplus in a market is equal to
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the are above the market supply curve and below the market price
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Consumer surplus in a market for a product would be equal to --- if the market price was zero
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the area under the demand curve
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The figure shows Arnold's demand curve for burritos. Arnold's marginal benefit from consuming the third burrito is
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$1.50
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The figure shows Arnold's demand curve for burritos. Arnold's marginal benefit from consuming the second burrito is
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$2.00
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The figure shows Arnold's demand curve for burritos. If the market price is $1.50, what is the consumer surplus on the first burrito?
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$1.00
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The figure shows Arnold's demand curve for burritos. If the market price is $1.50, what is the consumer surplus on the second burrito?
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$0.50
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The figure shows Arnold's demand curve for burritos. If the market price is $1.50, what is the consumer surplus?
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$1.50
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Suppliers will be willing to supply a product only if
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the price received is at least equal to the additional cost of producing the product
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The difference between the ---- and the ---- from the sale of a product is called producer surplus.
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lowest price a firm would have been willing to accept; price it actually receives
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Refer to the diagram to the right. what area represents producer surplus at a price of P2?
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A+B+C
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Refer to the diagram to the right. what area represents the increase in producer surplus when the market price rises from P1 to P2?
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A+B
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The graph at the right shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18. What is the value of consumer surplus at a price of $18?
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$60
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The graph at the right shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18. What is the value of producer surplus at a price of $18?
answer
$240
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The graph at the right shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18. What is the value of consumer surplus at the equilibrium price of $15?
answer
$240
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The graph at the right shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18. What is the value of producer surplus at the equilibrium price of $15?
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$160
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Economic surplus
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is equal to the sum of consumer surplus and producer surplus.
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---- is maximized in a competitive market when marginal benefit equals marginal cost
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economic surplus
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Economy efficiency is defined as a market outcome in which the marginal benefit to consumers of the last unit produces is equal to the marginal cost of production, and in which
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the sum of consumer surplus and producer surplus is a at a maximum
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In a competitive market, the demand curve shows the ---- received by consumers and the supply curve shows the -----
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marginal benefit; marginal cost
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The figure to the right represents the market for pecans. Assume that this is a competitive market. If the price of pecans is $3
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The quantity supplied is less than the economically efficient quantity
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The figure to the right represents the market for pecans. Assume that this is a competitive market. If the price of pecans is $9
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the quantity suppled is greater than the economically efficient quantity
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If there is a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and consumer surplus plus producer surplus is maximized, then
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economic efficiency is achieved
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rent control is an example of
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a price ceiling
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to affect the market outcome a price ceiling
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must be set below the equilibrium Price
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Government intervention in agricultural markets in the U.S. began in the
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1930s
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Economists refer a to a market where buying and selling take place at prices that violate government price regulations as
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a black market
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The figure shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000 per month. With rent control, the quantity supplied is 200 apartments. suppose apartment owners ignore the law and rent this quantity for the highest rent they can get. What is the highest rent they can get per month?
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$2,000
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The figure shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000 per month. What is the value of consumer surplus after the imposition of the ceiling?
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$250,000
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The figure shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000 per month. What is the value of producer surplus after the imposition of the ceiling?
answer
$50,000
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The figure shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000 per month. What is the value of the portion of producer surplus transferred to consumers as a result of the rent ceiling?
answer
$100,000
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The figure shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000 per month. Suppose that instead of a rent ceiling, the government imposed a price floor of $2,000 per month for apartments. What is the quantity of apartments demanded at the new price?
answer
200
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The figure shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000 per month. Suppose that instead of a rent ceiling, the government imposed a price floor of $2,000 per month for apartments. What is the value of consumer surplus after the imposition of the price floor?
answer
$50,000
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The figure shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000 per month. Suppose that instead of a rent ceiling, the government imposed a price floor of $2,000 per month for apartments. What is the value of producer surplus after the imposition of the price floor?
answer
$250,000
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Which term refers to legally established minimum prices that firms may charge?
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a price floor
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in order to be binding, a price ceiling
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must lie below the free market equilibrium price.
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Refer to the diagram to the right which shows the demand and supply curves for the almond market. The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at Pf. What area represents consumer surplus after the imposition of the prices floor?
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A
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Refer to the diagram to the right which shows the demand and supply curves for the almond market. The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at Pf. What area represents producer surplus after the imposition of the prices floor?
answer
B + E
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Refer to the diagram to the right which shows the demand and supply curves for the almond market. The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at Pf. What area represents the portion of consumer surplus that has been transferred to producer surplus as a result of the price floor?
answer
B
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price elasticity of demand measures
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how responsive quantity demanded is to a change in price.
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If the demand in inelastic, the absolute value of the price elasticity of demand is
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less than one
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A demand curve which s ---- represents perfectly inelastic demand, and a demand curve which is ---- represents inelastic demand
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vertical; downward sloping
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if demand is perfectly inelastic, the absolute value of the price elasticity of demand is
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zero
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if 50 units are sold at a price of $20 and 80 units are sold at a price of $15, what is the absolute value of the price elasticity of demand? use the midpoint formula.
answer
1.62
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suppose a hurricane decreases the supply of oranges roses from $120 a ton to $180 a ton and the quality sold decreased from 800 tons to 240 tons. What is the absolute value of the price elasticity of demand?
answer
2..69
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The inelastic segment of curve
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lies below the midpoint of the curve
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At the midpoint of the demand curve, in absolute value.
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the price elasticity coefficient in one
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When the price of a pistachio nut is $7.50 per lb. the quantity demanded is 48 lbs. When the price of pistachio nuts os $9.00 per lb. the quantity demanded is 40 lbs. When the midpoint formula is used to measure the price elasticity of demand we can say that the demand for pistachio nuts is.
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unit elastic
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A demand curve that is horizontal indicates that the commodity
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has a larger number of substitutes
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The demand for gasoline in the short run is
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inelastic because there are no good substitutes for gasoline
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If the market for a product is broadly defined, then
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there are few substitutes for the product and the demand for the product is relatively inelactic
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Which of the following could explain why the demand for table salt is inelastic?
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households devote a very small portion of their income to salt purchases
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Suppose a decrease in the supply of bottled water resulted in a decrease in revenue. This indicates that
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the demand for bottled water is price elastic in the price range considered
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Total revenue is equal to
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the price of a product multiplied by the number of units of the product sold.
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Along a downward-sloping, linear demand curve, total revenue is the greatest
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where demand is unit elastic
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Calculate the income elasticity if an 8 percent increase in income leads to a 4 percent increase in quantity demanded for organic produce.
answer
0.5
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Studies show that the income elasticity of demand for wine is approximately five. What does this mean?
answer
A one percent increase in income leads to five percent increase in wine consumption
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Economists estimated that the price elasticity of beer is -0.30 and the income elasticity of beer is 0.09. This means that
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an increase in the price of beer will lead to an increase in revenue for beer sellers and beer is a normal good
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cross-price elasticity of demand is calculated as the
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percentage change in quantity demanded of one good divided by percentage change in price of a different good
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if the cross - price elasticity of demand for goods X and Y is negative, this means the two goods are
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complements
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The income elasticity of demand measures
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the responsiveness of quantity demanded to changes in income
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If a good has a negative income elasticity of demand, this indicates that the good is
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inferior
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If a 5 percent increase in income leads to a 10 percent decrease in quantity demanded for a product, this product is
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an inferior good
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if the quantity demanded for a good rise as income rises then the income elasticity of demand for this good is ---- that 0, and the good is ---- good.
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greater; a normal
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