Microeconomics Exam 2 question sets

question

If a firm produces a product that has easily available variable inputs, its supply curve will be:

answer

Relatively Flat.

question

Taking the absolute of the cross-price elasticity of demand is incorrect because it would:

answer

remove the ability to tell whether the two products are substitutes or complements.

question

Demand for soda outside an airport is more elastic than inside of the airport because:

answer

Fewer choices means more inelastic demand.

question

When the absolute value of the price elasticity of demand is less than 1, demand is:

answer

inelastic

question

Suppose the percentage change in newspapers demanded for any price change is infinite. The absolute value of the elasticity of demand for newspapers is _____, and demand is _____.

answer

infinity; perfectly elastic

question

The percent change in insulin demanded for any price is zero. The demand curve for insulin is _______, and the price elasticity of demand is ________.

answer

Vertical; perfectly inelastic

question

Demand is more elastic when you are shopping in Walmart than when you shop at a small convenience store because:

answer

More competing products means greater elasticity.

question

If an item is a necessity rather than a luxury, its demand curve will be:

answer

Relatively steep

question

The price elasticity of demand for a good with a horizontal curve is:

answer

perfectly elastic

question

Suppose the percent change in the quantity demanded for water for any price is zero. The demand curve for water is _________, and the price elasticity of demand is perfectly:

answer

vertical; perfectly inelastic

question

A measure of how responsive buyers are to price changes is the:

answer

price elasticity of demand

question

income elasticity of demand measures how responsive the:

answer

quantity demanded of a good is to changes in income.

question

When the absolute value of the price elasticity of demand is infinite , then demand is:

answer

perfectly elastic

question

Good M has an income elasticity of demand of -0.7. Which of the following items might good M be?

answer

Generic-brand tooth paste

question

If demand is _________, a higher price yields ________ total revenue:

answer

Elastic; lower

question

If demand is _________, a higher price yields _________ total revenue:

answer

inelastic; higher

question

Which of the following claims reflect normative analysis?

answer

the minimum wage should be higher so that workers can earn a living wage.

question

Which of the following is NOT a source of market failure?

answer

lack of market power

question

If you are a seller making decisions according to the rational rule, you will:

answer

earn producer surplus on all except the last unit sold.

question

People gain consumer surplus when they purchase an item:

answer

at a price below the value of the benefit they receive from the item

question

Portia produces and sells headbands. Her marginal cost for one headband is $6, and her average cost is $4. She gains producer surplus only when she sells headbands at a price above:

answer

question

The concept of equity focuses on

answer

EQUALITY

question

What is positive analysis?

answer

It describes what is happening, why it is happening, or predicts what will happen.

question

The area on a market graph that lies below the prices and above the supply curve is equal to:

answer

producer surplus.

question

Efficient outcomes:

answer

may not make everyone happy.

question

A subsidy is:

answer

a negative tax and a payment made by the government to those who make a specific choice

question

A tax on sellers shifts the:

answer

supply curve to the left

question

A binding price ceiling is:

answer

always below the equilibrium price

question

When looking at a demand and supply graph, if a tax is implemented on a seller, the vertical distance between the old and new supply curves at the new equilibrium quantity will be equivalent to:

answer

amount of the tax

question

A tax on buyers:

answer

shifts the demand curve to the left

question

A quantity regulation is:

answer

a minimum or maximum quantity that can be sold

question

When the price elasticity of demand is ________ relative to the price elasticity of supply, then buyers bear _______ of the economic burden of a tax.

answer

larger; a smaller share

question

Which of the following can a government use to change the quantity traded in a market

answer

-quotas
-binding price floors
-binding price ceilings
-taxes

question

Which of the following is an example of a quota?

answer

A government limits the amount of a product that can be sold in a market.

question

A binding price floor in a market is removed. which of the following is likely to occur as a result?

answer

the market price will fall

question

When trade is based on comparative advantage...

answer

both trading partners end up better off

question

Which of the following is a TRUE statement about work assignments based on comparative advantage?

answer

the person with the lowest opportunity cost at a task should perform it.

question

When resources are organized according to the principle of comparative advantage, producers become

answer

more specialized do they can trade and end up with more of everything.

question

Comparative advantage explains why people

answer

specialize and trade

question

you ave a comparative advantage if you can compete a task

answer

at a lower opportunity cost than anyone else

question

the person who has an absolute advantage in a task

answer

is the one who is best at the task

question

When your employees receive work assignments based on who has the lowest opportunity cost in performing each task, the basis for the work assignment is

answer

comparative advantage

question

specialization will increase output when it is based on

answer

comparative advantage

question

Statutory Burden

answer

tax on sellers

question

economic burden

answer

tax faced by both buyers and sellers

question

Tax incidence depends on

answer

ED, ES

question

The only way to avoid a tax is

answer

to avoid buying or selling things that are taxed

question

sellers bear a _______ share of the tax burden when supply is _________.

answer

smaller, relatively elastic.

question

Buyers bear a _______ share of tax burden when demand is ________.

answer

smaller, elastic

1 of 49

question

If a firm produces a product that has easily available variable inputs, its supply curve will be:

answer

Relatively Flat.

question

Taking the absolute of the cross-price elasticity of demand is incorrect because it would:

answer

remove the ability to tell whether the two products are substitutes or complements.

question

Demand for soda outside an airport is more elastic than inside of the airport because:

answer

Fewer choices means more inelastic demand.

question

When the absolute value of the price elasticity of demand is less than 1, demand is:

answer

inelastic

question

Suppose the percentage change in newspapers demanded for any price change is infinite. The absolute value of the elasticity of demand for newspapers is _____, and demand is _____.

answer

infinity; perfectly elastic

question

The percent change in insulin demanded for any price is zero. The demand curve for insulin is _______, and the price elasticity of demand is ________.

answer

Vertical; perfectly inelastic

question

Demand is more elastic when you are shopping in Walmart than when you shop at a small convenience store because:

answer

More competing products means greater elasticity.

question

If an item is a necessity rather than a luxury, its demand curve will be:

answer

Relatively steep

question

The price elasticity of demand for a good with a horizontal curve is:

answer

perfectly elastic

question

Suppose the percent change in the quantity demanded for water for any price is zero. The demand curve for water is _________, and the price elasticity of demand is perfectly:

answer

vertical; perfectly inelastic

question

A measure of how responsive buyers are to price changes is the:

answer

price elasticity of demand

question

income elasticity of demand measures how responsive the:

answer

quantity demanded of a good is to changes in income.

question

When the absolute value of the price elasticity of demand is infinite , then demand is:

answer

perfectly elastic

question

Good M has an income elasticity of demand of -0.7. Which of the following items might good M be?

answer

Generic-brand tooth paste

question

If demand is _________, a higher price yields ________ total revenue:

answer

Elastic; lower

question

If demand is _________, a higher price yields _________ total revenue:

answer

inelastic; higher

question

Which of the following claims reflect normative analysis?

answer

the minimum wage should be higher so that workers can earn a living wage.

question

Which of the following is NOT a source of market failure?

answer

lack of market power

question

If you are a seller making decisions according to the rational rule, you will:

answer

earn producer surplus on all except the last unit sold.

question

People gain consumer surplus when they purchase an item:

answer

at a price below the value of the benefit they receive from the item

question

Portia produces and sells headbands. Her marginal cost for one headband is $6, and her average cost is $4. She gains producer surplus only when she sells headbands at a price above:

answer

question

The concept of equity focuses on

answer

EQUALITY

question

What is positive analysis?

answer

It describes what is happening, why it is happening, or predicts what will happen.

question

The area on a market graph that lies below the prices and above the supply curve is equal to:

answer

producer surplus.

question

Efficient outcomes:

answer

may not make everyone happy.

question

A subsidy is:

answer

a negative tax and a payment made by the government to those who make a specific choice

question

A tax on sellers shifts the:

answer

supply curve to the left

question

A binding price ceiling is:

answer

always below the equilibrium price

question

When looking at a demand and supply graph, if a tax is implemented on a seller, the vertical distance between the old and new supply curves at the new equilibrium quantity will be equivalent to:

answer

amount of the tax

question

A tax on buyers:

answer

shifts the demand curve to the left

question

A quantity regulation is:

answer

a minimum or maximum quantity that can be sold

question

When the price elasticity of demand is ________ relative to the price elasticity of supply, then buyers bear _______ of the economic burden of a tax.

answer

larger; a smaller share

question

Which of the following can a government use to change the quantity traded in a market

answer

-quotas
-binding price floors
-binding price ceilings
-taxes

question

Which of the following is an example of a quota?

answer

A government limits the amount of a product that can be sold in a market.

question

A binding price floor in a market is removed. which of the following is likely to occur as a result?

answer

the market price will fall

question

When trade is based on comparative advantage...

answer

both trading partners end up better off

question

Which of the following is a TRUE statement about work assignments based on comparative advantage?

answer

the person with the lowest opportunity cost at a task should perform it.

question

When resources are organized according to the principle of comparative advantage, producers become

answer

more specialized do they can trade and end up with more of everything.

question

Comparative advantage explains why people

answer

specialize and trade

question

you ave a comparative advantage if you can compete a task

answer

at a lower opportunity cost than anyone else

question

the person who has an absolute advantage in a task

answer

is the one who is best at the task

question

When your employees receive work assignments based on who has the lowest opportunity cost in performing each task, the basis for the work assignment is

answer

comparative advantage

question

specialization will increase output when it is based on

answer

comparative advantage

question

Statutory Burden

answer

tax on sellers

question

economic burden

answer

tax faced by both buyers and sellers

question

Tax incidence depends on

answer

ED, ES

question

The only way to avoid a tax is

answer

to avoid buying or selling things that are taxed

question

sellers bear a _______ share of the tax burden when supply is _________.

answer

smaller, relatively elastic.

question

Buyers bear a _______ share of tax burden when demand is ________.

answer

smaller, elastic

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