question
A straight-line production possibilities curve has
answer
a constant opportunity cost between the two goods.
question
Suppose the absolute price elasticity of demand for newsletter subscriptions is 1.3. In order to increase the total revenues from subscriptions, the publishers should
answer
reduce the price of newsletters.
question
How does a change in quantity supplied differ from a change in supply?
answer
A change in the price affects quantity supplied, not supply.
question
When supply and demand for a product increase simultaneously, we
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cannot predict the market clearing price, but know that the equilibrium quantity will increase.
question
Assume that the marginal utility from good x is 10 units and that the price of good x is $5 per unit. The marginal utility from good y is 15 units and its unit price is $7. In this situation, a utility-maximizing consumer should
answer
consume more of good y.
question
According to the table above, a surplus exists when
answer
the price is greater than $3 per unit.
question
In the table above, how much beer and pizza will Bob consume if the price of a piece of pizza is $2 and the price of beer is $2?
answer
2 pieces of pizza and 2 beers
question
Refer to the above table. The price of hamburger is $1, the price of a movie is $6, and the consumer has $15. What is the consumer's optimum? *
answer
3 hamburgers and 2 movies.
question
Suppose that when the price of a soft drink rises 10%, the quantity demanded of the soft drink falls 5%. Based on this information, what is the approximate absolute price elasticity of demand for the soft drink?
answer
0.5
question
According to the above figure, a shortage will occur at a price at which *
answer
quantity demanded exceeds quantity supplied.
question
Compared to the long-run absolute elasticity of demand, the short-run absolute elasticity of demand
answer
smaller.
question
A 6 percent increase in the price of neckties leads to a 3 percent decrease in the quantity demanded of neckties. The absolute elasticity of demand is
answer
0.5
question
The price elasticity of demand shows
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the proportionate amount by which the quantity demanded changes in response to a proportionate change in price.
question
A shortage creates a situation that forces prices to ________ while a surplus creates a situation that forces prices to ________.
answer
increase, decrease
question
Which of the following statements is FALSE?
answer
An increase in demand shifts the demand curve to the left, closer to the price axis.
question
Using the above table, what is the opportunity cost of moving from alternative C to alternative D?
answer
90 loaves of bread
question
If the absolute price elasticity of demand good for Y is 0.75, when there is a 30 percent increase in price, we can conclude that the quantity demanded *
answer
has fallen by 22.5 percent.
question
If bagels and croissants are substitute goods, which of the following is likely to occur if the price of bagels has decreased?
answer
The demand curve for croissants shifts to the left.
question
Bill Bonecrusher graduates from college with a choice of playing professional football at $2 million a year or coaching for $50,000 a year. He decides to play football, but eight years later he quits football to make movies for $3 million a year. His opportunity cost at graduation was ________ and eight years later was ________.
answer
$50,000; $2 million
question
A demand curve for a normal good
answer
shows the inverse relationship between price and quantity demanded.
question
When the price of a soft drink from the campus vending machine was $0.60 per can, 100 cans were sold each day. After the price increased to $0.75 per can, sales dropped to 85 cans per day. Over this range, the absolute price elasticity of demand for soft drinks was approximately equal to *
answer
0.73
question
Which of the following will most likely happen when better technology is used in production? *
answer
an outward shift of the production possibilities curve.
question
Price floors are designed to
answer
establish a minimum allowed price.
question
If the price elasticity of demand for apples is greater than 1, an increase in apple prices will *
answer
lower total revenue.
question
For which of the following would the absolute price elasticity of demand be the greatest?
answer
Pepsi Cola
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