question
which of the following will NOT cause the demand curve to shift to the left?
answer
Increase in customers income
Favorable consumer perception/preference
Increase in the price of substitution
Decrease in price of complement
Season
Favorable consumer perception/preference
Increase in the price of substitution
Decrease in price of complement
Season
question
Which of the following will NOT cause the demand curve to shift to the right?
answer
Decrease in income
Decrease in price of substitution
Increase in price of complement
Decrease in price of substitution
Increase in price of complement
question
The law of supply required that the quantity supplied as price increases
answer
False
question
In a perfectly competitive market, prices are determined through the interactions of the forces of supply and demand
answer
True
question
The law of demand requires that the quantity demanded decreases as price increases
answer
True
question
Which of the following will NOT cause the supply curve to shift to the left
answer
An increase in supply
question
Which of the following will NOT cause the supply curve to shift to the right
answer
A decrease in supply
question
What is the difference between the change in quantity demanded and the change in demand
answer
Change in quantity demanded: when price changes, the quantity demand changes in response to the price change. Inverse relationship
Change in demand: demand changes when any of the demand determinants except the price of the product/commodity changes
Change in demand: demand changes when any of the demand determinants except the price of the product/commodity changes
question
What is the difference between the change in quantity supplied and the change in supply
answer
Change in quantity supplied: a change in quantity supplied occurs such as a result of a change in price
Change in supply: occurs when there is a change in the determinants of supply
Change in supply: occurs when there is a change in the determinants of supply
question
Which of the following is not a demand determinant?
answer
ARE:
Own price, taste/preference, consumers income, season, price of substitution, price of complement, number of buyers.
Own price, taste/preference, consumers income, season, price of substitution, price of complement, number of buyers.
question
Which of the following is not a supply determinant?
answer
ARE:
Price of commodity, costs of inputs, state of technology, number of producers, taxes, substitutes, weather and other natural factors.
Price of commodity, costs of inputs, state of technology, number of producers, taxes, substitutes, weather and other natural factors.
question
The demand for rice is described by the equation:
Qd=25+0.3P
Where the quantity of rice demanded and is the price of rice per bushel
a) What are the quantities demanded when the prices are $10, $20, $50?
b) Sketch the demand curve for rice. Does the demand curve obey the law of demand? Is it conclusive or inconclusive?
Qd=25+0.3P
Where the quantity of rice demanded and is the price of rice per bushel
a) What are the quantities demanded when the prices are $10, $20, $50?
b) Sketch the demand curve for rice. Does the demand curve obey the law of demand? Is it conclusive or inconclusive?
answer
a) Qd=28 Qd=31 Qd=40
b) The demand of rice dose not obey the law of demand. This data is inconclusive.
b) The demand of rice dose not obey the law of demand. This data is inconclusive.
question
The initial price of corn was $2.00 per pound, and the quantity supplied was 300 pounds. The price decreased to $1.00 per pound and the quantity supplied to 200 pounds.
· What is the percentage change in quantity supplied?
· What is the percentage change in price?
· Calculate supply elasticity of corn per pound.
· What is the percentage change in quantity supplied?
· What is the percentage change in price?
· Calculate supply elasticity of corn per pound.
answer
-33.3%
-50%
1.5%
-50%
1.5%
question
1. Assuming the supply function for a chick-fil-a sandwich is Q = 10 + 2P. What is
a) The slope of the supply function
b) The price elasticity of supply for a chick-fil-a sandwich at points Q = 100 and P = 20
Interpret your result
c) Is the supply function relatively price elastic or relatively price inelastic?
a) The slope of the supply function
b) The price elasticity of supply for a chick-fil-a sandwich at points Q = 100 and P = 20
Interpret your result
c) Is the supply function relatively price elastic or relatively price inelastic?
answer
a) 2
b) 2x(5/100)=.1%
interpret your answer
For every 1% increase in the price of a chick-fil-a sandwich, the quantity supplied increases by .1%.
c)Inelastic 0.1<1
b) 2x(5/100)=.1%
interpret your answer
For every 1% increase in the price of a chick-fil-a sandwich, the quantity supplied increases by .1%.
c)Inelastic 0.1<1
question
Define Market Equilibrium
answer
It occurs at the point where the supply curve and the demand curve interest.
question
Cross-price elasticity of demand is used for each of the following except
answer
Used for:
Positive, negative, and unrelated
Positive, negative, and unrelated
question
Manpa is a country whose source of income is oil. Recently, the price of oil rose due to the Covid-19 pandemic. As a result, the per capita income of the country increased from $20,000 to $30,000. The income increase impacted households' demand for wine. Wine demand increased from 120 to 150 units.
Calculate the income elasticity of demand for wine. Interpret and characterize the result.
Calculate the income elasticity of demand for wine. Interpret and characterize the result.
answer
(30/10,000)x(20,000/120)=.5
For every 1% increase in price of oil, quantity demanded will increase by .5 percent.
For every 1% increase in price of oil, quantity demanded will increase by .5 percent.
question
If the demand function for corn is Qd = 100 - 5p and the supply function is Qs = 50 + 5p, what is the equilibrium quantity? What is the equilibrium price?
answer
100-5p=50+5p
50=10p
5=p
100-5(5)=75
50=10p
5=p
100-5(5)=75
question
What "measures the benefits/values that consumers receive from paying less than the maximum amount that they are willing to pay"?
answer
Consumer surplus
question
What "measures the benefits/values that producers receive from selling a product above their marginal cost of production"?
answer
Producer surplus
question
____________ is the area under the equilibrium price. ___________ is the area above the equilibrium price.
answer
Producer surplus
Consumer surplus
Consumer surplus
question
What is the total cost incurred by a producer from the production of a commodity?
answer
Producer cost
question
How do you find Total Revenue, in regards to the previous questions?
answer
Price x Total quantity sold = Total revenue
question
Define Price Elasticity of Demand
answer
it is the degree of responsiveness of quantity demanded to changes in the price of a commodity
question
When consumers are sensitive or responsive to changes in the price of a commodity, we say the commodity is
answer
elastic
question
When a price change produces a less amount of change in Quantity Demanded, we say such a commodity is
answer
inelastic
question
What is the formula for finding price elasticity of demand?
answer
% Change in quantity demanded / % change in price
question
The price of beef increases from $20 to $22 per pound. As a result, the Quantity Demanded by the members of this class decreases from 100 to 80. What is the price elasticity of demand for beef? Interpret result.
answer
(-20/2)x(20/100)=-2
For every 1% increase in price of beef, quantity demanded for beef will decrease by 2%. This is an inferior good as IE < 0.
For every 1% increase in price of beef, quantity demanded for beef will decrease by 2%. This is an inferior good as IE < 0.
question
The price of chicken increases from $2 to $3. As a result, the quantity demanded by class members of this class decreases from 100 to 80. What is the price elasticity of demand for beef? Interpret Result.
answer
(-20/1)x(2/100)=-.4
For every 1% increase in price of chicken, quantity demanded for chicken will decrease by .4%. this is an inferior good as IE<0
For every 1% increase in price of chicken, quantity demanded for chicken will decrease by .4%. this is an inferior good as IE<0
question
The price of corn falls from by 10% per bushel. As a result, the quantity demanded increases by 10%. What is the price elasticity of demand for corn? Interpret Result.
answer
10/-10=-1
For every 1% increase in price of corn, quantity demanded for corn will decrease by 1%.
For every 1% increase in price of corn, quantity demanded for corn will decrease by 1%.
question
The price of strawberries falls by 5% per bushel, and as a result, the quantity demanded increases by 10%. Estimate the price elasticity of strawberries. Interpret your results
answer
(10/-5)=-2
For every 1% increase of price in strawberries, quantity demanded will decrease by 2%.
For every 1% increase of price in strawberries, quantity demanded will decrease by 2%.
question
Suppose that when the price of a good is $10, the quantity demanded is 50 units. When the price increases to $12, the quantity demanded decreases to 45 units. Find price elasticity of demand. Interpret your results.
answer
(-5/2)x(10/50)=-.5%
For every 1% increase in the price of a good, quantity demanded of the good will decrease by .5%.
For every 1% increase in the price of a good, quantity demanded of the good will decrease by .5%.
question
What are the ranges of price elasticity of demand?
answer
1. Inelastic demand
2. Elastic demand
3. Perfectly inelastic demand
4. Perfectly elastic demand
5. Unitary elastic demand
2. Elastic demand
3. Perfectly inelastic demand
4. Perfectly elastic demand
5. Unitary elastic demand
question
Which of the following is a determinant of the price elasticity of demand?
answer
The price of the product
question
Total revenue is made up of two variables - price and quantity. True or false?
answer
True
question
A price increase will always produce an increase in total revenue. True or false?
answer
False
question
35. A market analyst found that the cross-price elasticity of wheat and "garri" is 0.2. We may conclude that wheat and "garri" are......................
answer
Substitute
question
35. The price of medium-sized pizza at Pizza Hut had increased by 10%. Customers were not happy about this increase and thus switched to buying a medium-sized pizza at Dominos. This switch led to a 5% increase in the quantity demand for Domino's pizza.
a. Calculate the cross-price elasticity of a medium-sized Domino's pizza
b. Interpret your result
a. Calculate the cross-price elasticity of a medium-sized Domino's pizza
b. Interpret your result
answer
a)5/10=.5%
b)For every 1% increase in price of pizza hut pizza, quantity demanded for dominos pizza increases by .5%. This is a substitution EC>0.
b)For every 1% increase in price of pizza hut pizza, quantity demanded for dominos pizza increases by .5%. This is a substitution EC>0.
question
1. If a product has an elastic demand, an increase in price causes total revenue to increase. True or False?
answer
False
question
1. If a product has an inelastic demand, an increase in price causes total revenue to increase. True or False?
answer
True
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