question
Why is the demand curve downward slope?
answer
The consumer is maximizing utility subject to their budget; when price goes up and you cannot afford as much.
question
Calculate the elasticity
answer
% change in quantity / % change in price
question
Why is the elasticity among the demand curve not constant?
answer
More elastic at higher prices and more inelastic at lower prices.
question
cross price eleasticity
answer
Qd new - Qd old/ Qd old * 100
question
Short run
answer
Capital is fixed and only labor (variable) changes.
question
Long run
answer
Both capital and labor change
question
Where will the firm in a perfect market produce?
answer
If the price is above the AVC the firm will not shut down.
question
The "law of demand" states that, other thing remaining the same, the higher
A) consumers' incomes, the greater is the demand.
B) the price of a good, the lower is the demand for this good.
C) the price of a good, the higher is the quantity demanded.
D) the price of a good, the smaller is the quantity demanded.
A) consumers' incomes, the greater is the demand.
B) the price of a good, the lower is the demand for this good.
C) the price of a good, the higher is the quantity demanded.
D) the price of a good, the smaller is the quantity demanded.
answer
D
question
If the price of product X falls and this change increases the demand for product Y, then
A) X and Y are substitutes.
B) X and Y are complements.
C) X is an inferior good.
D) Y is an inferior good
A) X and Y are substitutes.
B) X and Y are complements.
C) X is an inferior good.
D) Y is an inferior good
answer
B
question
An increase the expected future price of a good
answer
Increases its demand
question
If mac and cheese is an inferior good, an increase in income will
answer
decrease the demand for mac and cheese
question
When the price of a normal good falls
answer
The quantity demanded increases.
question
Ham and cheese are compliments. If the price of ham rises, the demand for eggs will
answer
Decrease and the demand curve for eggs will shift leftward.
question
A normal good is one
answer
For which demand increases when income increases.
question
Cereal and oatmeal are complements in consumption and the price of a cereal increases. As a result, the demand for
A) oatmeal will increase that is, the demand curve will shift rightward.
B) cereal will increase that is, the demand curve will shift rightward.
C) oatmeal will decrease that is, the demand curve will shift leftward.
D) cereal will decrease that is, the demand curve will shift leftward.
A) oatmeal will increase that is, the demand curve will shift rightward.
B) cereal will increase that is, the demand curve will shift rightward.
C) oatmeal will decrease that is, the demand curve will shift leftward.
D) cereal will decrease that is, the demand curve will shift leftward.
answer
C
question
Which of the following will not shift the supply curve for apples?
answer
A change in the price of apples.
question
Over the past decade technological improvements have lowered the cost of producing corn and have increased..
answer
The supply but not the demand for corn
question
The supply curve slopes upward when graphed against ________, because of ________.
A) income; increasing marginal cost
B) income; decreasing marginal cost
C) the price of the good; decreasing marginal cost
D) the price of the good; increasing marginal cost
A) income; increasing marginal cost
B) income; decreasing marginal cost
C) the price of the good; decreasing marginal cost
D) the price of the good; increasing marginal cost
answer
D
question
Quantity supplied of a good is
answer
the amount that the producers are planning to sell at a particular price during a given time period
question
Cross price elasticity
answer
Qnew-Qold/Qold * 100
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