question
If the demand for insulin is inelastic, one may conclude that the absolute value of the price elasticity of demand is...
answer
Less than one and a fall in price will cause expenditures on insulin to fall
question
If the price elasticity of demand for a good is (-1.0), a 20% decrease in the price of this good will cause...
answer
No change in expenditures on this good
question
If the cross-price elasticity of demand for good X and good Y is (-3.0), we may conclude that...
answer
-Goods X and Y are complements
-A fall in the price of good X will increase the demand for good Y
-A rise in the price of good Y will decrease the demand for good X
-A fall in the price of good X will increase the demand for good Y
-A rise in the price of good Y will decrease the demand for good X
question
The Second Law of Demand states...
answer
Demand curves are more elastic in the long run compared to the short run
question
The own-price elasticity of demand for insulin is -0.45. If the price of insulin decreases by 20%, what will happen to the quantity of insulin demanded?
answer
It will rise 9%
question
If quantity of milk falls by 10% when price increases by 5%, we know that the absolute value of the own-price elasticity of milk is...
answer
2.0
question
If the cross- price elasticity between cognac and and cigars is -3, a 3% increase in the price of cognac will lead to...
answer
9% drop in demand for cigars
question
Is the own price elasticity of demand is equal to zero, then...
answer
-Demand is perfectly elastic
-The demand curve is vertical
-Consumers do not respond at all to changes in price
-The demand curve is vertical
-Consumers do not respond at all to changes in price
question
The demand for Five Guys Burger is
answer
More elastic than the demand for food in general
question
Assume that the price elasticity of demand is -1.25 for a certain firm's product. If the firm increases prices, then the firm's manager can expect total revenue to...
answer
Decrease
question
What is correct about the own-price elasticity of demand?
answer
-Demand tends to be more elastic in the short-term than the long term
-Demand tends to be more elastic for goods that compromise a larger share of a consumer's budget
-Demand tends to be more elastic as more substitutes are available
-Demand tends to be more elastic for goods that compromise a larger share of a consumer's budget
-Demand tends to be more elastic as more substitutes are available
question
If an increase in the price of tea increases the demand for coffee, this indicates that...
answer
These two goods are substitutes
question
If the own price elasticity is equal to negative infinity, then...
answer
Demand is perfectly elastic
question
The best good to place a tax on (in terms of revenue generating and efficiency) is...
answer
Perfectly inelastic
question
The height of an individuals demand curve (measured at quantity Q) shows...
answer
-The highest price per unit the consumer will pay for the Qth unit
-The marginal value of the Qth unit
-The marginal value of the Qth unit
question
The 1st law of supply implies that when a price of good X decreases, the result is...
answer
A decrease in the quantity supplied of good X
question
An "increase in supply" for a good refers to
answer
A shift to the right of the supply curve for that good
question
Paint is an input in the production of "painting service". If the price of paint increases, the equilibrium price and the quantity of "painting service", respectively, will...
answer
Rises, Falls
question
Michelin Tires have an income elasticity of of 0.5. Ceteris paribus , if the income of consumers increase, what will happen to the equilibrium price and quantity, respectively, of Michelin Tires?
answer
Rises, Rises
question
The height of a firm's supply curve (measured at some quantity, Q) shows...
answer
-How much a unit costs when the firm is producing at a rate of Q
-The marginal cost of the Qth unit
-The lowest price per unit the firm would accept to prduce at a rate of Q
-The marginal cost of the Qth unit
-The lowest price per unit the firm would accept to prduce at a rate of Q
question
An "increase in quantity demand" for robots could be caused by...
answer
A decrease in the price of robots
question
Suppose I purchased a 'Sweet 16' t-shirt for $24. Which of the following statements must be true
x- my marginal value for this shirt must be greater than or equal to $24
y- my marginal value for a second 'sweet 16' t-shirt must be less than $24
z-my marginal value for a third 'sweet 16' t-shirt will be less than the marginal value of a second one
x- my marginal value for this shirt must be greater than or equal to $24
y- my marginal value for a second 'sweet 16' t-shirt must be less than $24
z-my marginal value for a third 'sweet 16' t-shirt will be less than the marginal value of a second one
answer
X and Z only
question
An "increase in demand" for a good refers to...
answer
-An increase in the desired rate of consumption at all prices
-A shift to the right of the demand curve for that good
-A shift to the right of the demand curve for that good
question
A 'decrease in demand' for a good refers to...
answer
-A reduction in the desired rate of consumption, at all prices
-A shift to the left of the demand curve for that good
-A shift to the left of the demand curve for that good
question
What is consumer surplus?
answer
-The amount of value a consumer receives beyond what he exchanges
-The area under the demand curve, above the market price line, from 0 to given quantity
-Total value minus total expenditure
-The area under the demand curve, above the market price line, from 0 to given quantity
-Total value minus total expenditure
question
Minimum wage legislation
answer
-Is considered a binding price-floor
-Shifts surplus from businesses to laborers
-Shifts surplus from businesses to laborers
question
What is caused by 'Rent Control' legislation?
answer
-Increase in consumer surplus
-Decrease in producer surplus
-Dead weight loss
-Decrease in producer surplus
-Dead weight loss
question
What does price control cause?
answer
-Alternative allocating schemes aside from price
-Efficient outcomes in the markets in question
-Reductions in the gains from trade in the markets in question
-Efficient outcomes in the markets in question
-Reductions in the gains from trade in the markets in question
question
What can producer surplus be thought of?
answer
Profit
question
When we use the term " gains from trade", we are referring to...
answer
-The extent to which individuals, firms, or nations benefit by engaging in exchange
-The amount that society is better off by as a result of voluntary exchange
-The amount that society is better off by as a result of voluntary exchange
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