Microeconomics Final: Unit 2 - Assignment Essays %

question

In a market economy

answer

supply and demand determine prices and prices, in turn, allocate the economy's scarce resources.

question

Which of the following statements is correct?

answer

Buyers determine demand, and sellers determine supply.

question

A group of buyers and sellers of a particular good or service is called a

answer

market

question

most markets in the economy are

answer

highly competitive

question

In a comparative market, the quantity of a product produced and the price of the product are determined by

answer

all buyers and all sellers

question

In a competitive market, buyer

answer

and sellers are price takers

question

An example of a perfectly competitive market would be the

answer

soybean market

question

A monopoly is a market with one

answer

seller, and that seller sets the price

question

the quantity demanded of a good is the amount that buyers are

answer

willing and able to purchase.

question

An increase in quantity demanded

answer

results in a movement downward and to the right along a demand curve.

question

An increase in the price of a good will

answer

decrease quantity demanded.

question

"Other things equal, when price of a good rises, the quantity demanded of the good falls, and when the price falls, the quantity demanded rises." This relationship between price and quantity demanded is referred to as

answer

the law of demand

question

A table that shows the relationship between the price of a good and the quantity demanded of that good is called

answer

demand schedule

question

When we move along a given demand curve,

answer

all non-price determinants of demand are held constant.

question

The demand curve for a good is a line that relates

answer

price and quantity demanded.

question

When drawing a demand curve,

answer

price is measured along the vertical axis, and quantity demanded is measured along the horizontal axis.

question

The market demand curve

answer

is the sum of all individual demand curves.

question

An increase in demand is represented by a

answer

rightward shift of a demand curve.

question

A leftward shift of a demand curve is called a

answer

decrease in demand.

question

Which of the following changes would not shift the demand curve for a good or service?

answer

a change in the price of the good or service

question

The demand curve for coffee shifts

answer

When a determinant of the demand for coffee other than the price of coffee changes

question

Which of the following is not a determinant of demand?

answer

The price of a resource that is used to produce the good

question

You lose your job and, as a result, you buy fewer iTunes music downloads. This shows that you consider iTunes music downloads to be a

answer

normal good.

question

Soup is an inferior good if the demand

answer

for soup falls as income rises

question

Two goods are substitutes when a decrease in the price of one good

answer

decreases the demand for the other good.

question

If textbooks and study guides are complements, then an increase in the price of textbooks will result in

answer

fewer study guides being sold.

question

unit 2 27

answer

question

unit 2 28

answer

question

unit 2 29

answer

question

unit 2 30

answer

question

The quantity supplies of a good is the amount that

answer

sellers are willing and able to sell

question

When the pice of a good or service changes,

answer

there is a movement along a given supply curve.

question

An increase in the price of blueberries would lead to an

answer

increased supply of blueberries and a movement up and to the right along the supply curve for blueberries.

question

"Other things equal, when the price of a good rises, the quantity supplies of the good also rises, and when the price falls, the quantity supplies falls as well." This relationship between price and quantity supplied

answer

is referred to as the law of supply.

question

A supply curve slope upward because

answer

an increase in price gives producers an incentive to supply a larger quantity.

question

A rightward shift of a supply curve is called an

answer

increase in supply.

question

unti 2 37

answer

question

Lead is an important input in the production of crystal. If the price of lead decreases, then we would expect the supply of

answer

crystal to increase

question

A decrease in the number of sellers in the market causes

answer

the supply curve to shift to the left.

question

The unique point at which the supply and demand curves intersect is called

answer

equilibrium

question

In markets, prices move toward equilibrium because of

answer

the actions of buyers and sellers

question

Which of the following event must cause equilibrium quantity to rise?

answer

Demand and supply both increase

question

If the demand for a product increases, then we would expect equilibrium price and

answer

equilibrium quantity both to increase.

question

Suppose that demand for a good increases and, at the same time, supply of the good decreases. What would happen in the market for the good?

answer

Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous.

question

Unit 2 45

answer

question

unit 2 46

answer

question

unit 2 47

answer

question

A decrease in input costs to firms in a market will result in a

answer

decrease in equilibrium price and an increase in equilibrium quantity.

question

Exceptionally favorable growing conditions in the vineyards of Napa Valley would cause an

answer

increase in the supply of wine, decreasing price

question

Which of the following events would unambiguously cause a decrease in the equilibrium price of cotton shirts?

answer

An increase in the price of wool shirts and an increase in the price of raw cotton.

question

If consumers view cappuccinos and lattes as substitutes, what would happen to the equilibrium price and quantity of lattes if the price of cappuccinos falls?

answer

Both the equilibrium price and quantity would decrease.

question

If macaroni and cheese is an inferior good, what would happen to the equilibrium price and quantity of macaroni and cheese if consumers incomes rise?

answer

Both the equilibrium price and quantity would decreases.

question

unit 2 53

answer

question

unit 2 54

answer

question

unit 2 55

answer

question

The signals that guide the allocation of resources in a market economy are

answer

prices

question

In general, elasticity is a measure of

answer

how much buyers and sellers respond to changes in market conditions.

question

Demand is said to be price elastic if

answer

buyers respond substantially to changes in the price of the good.

question

Goods with many close substitutes tend to have

answer

more elastic demands.

question

For a good that is a necessity,

answer

demand tends to be inelastic.

question

Which of the following is likely to have the most price elastic demand?

answer

lattes

question

Which of the following is likely to have the most price inelastic demand?

answer

lightbulbs

question

A person who takes a prescription drug to control high cholesterol most likely has a demand for that dug that is

answer

inelastic.

question

The midpoint method is used to compute elasticity because it

answer

gives the same answer regardless of the direction of change.

question

unit 2 65

answer

question

When the price of a good is $5, the quantity demanded is 100 units per month; when the price is $7 the quantity demanded is 80 units per month. Using the midpoint method, the price elasticity of demand is about

answer

.67

question

When the price of an eBook is $15.00, the quantity demand is 400 ebooks per day. When the price falls to $10.00, the quantity demanded increase to 700. Using the midpoint method, we know that the demand of ebooks is

answer

elastic

question

If the price elasticity of demand for a good is 2.0, then a 10 percent increase in price results in a

answer

20% decrease in the quantity demanded.

question

For a particular good, a 2% increase in price causes a 12% decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

answer

The good is a luxury.

question

unit 2 70

answer

question

An increase in price causes an increase in total revenue when demand is

answer

inelastic.

question

On a downward-sloping linear demand curve, total revenue reaches its maximum value at the

answer

midpoint of the demand curve.

question

When demand is elastic, an increase in price will cause

answer

a decrease in total revenue.

question

When demand is inelastic, a decrease in price will cause

answer

a decrease in total revenue.

question

unit 2 75

answer

question

unit 2 76

answer

question

Income elasticity of demand measures how

answer

the quantity demanded changes as consumer income changes.

question

unit 2 78

answer

question

unit 2 79

answer

question

Cross-price elasticity of demand measures how

answer

the quantity demanded of one good changes in response to a change in the price of another good.

question

Which of the following expressions represents a cross-price elasticity of demand?

answer

percentage change in quantity demanded of bread divided by percentage change in price of butter.

question

If the cross-price elasticity of two goods is negative, then the two goods are

answer

complements

question

The price elasticity of supply measures how responsive

answer

sellers are to a change in price.

question

A key determinant of the price elasticity of supply is the

answer

time horizon

question

When a supply curve is relatively flat,

answer

supply is relatively elastic.

question

If a 20% change in price results in a 15% change in quantity supplies, then the price elasticity of supply is about

answer

.75, and supply is inelastic

question

Because the demand for wheat tends to be inelastic, the development of a new, more productive hybrid wheat would ten to

answer

decrease the total revenue of wheat farmers.

question

Knowing that the demand for wheat is inelastic, if all farmers voluntarily did not plant wheat on 10% of their land, then

answer

wheat farmers would experience an increase in their total revenue.

question

In the market for oil in the short run, demand

answer

and supply are both inelastic.

question

In a competitive market free of government regulation,

answer

Price adjusts until quantity demanded equals quantity supplied.

question

A legal maximum on the price at which a good can be sold is called a price

answer

ceiling

question

If a price ceiling is not binding, then

answer

there will be no effect on the market price or quantity sold.

question

A price ceiling will be binding only if it is set

answer

below the equilibrium price.

question

If the government removes a binding price ceiling from a market, then the price paid by buyers will

answer

increase, and the quantity sold in the market will increase.

question

A legal minimum on the price at which a good can be sold is called a

answer

price floor

question

If the government removes a binding price floor from a market, then the price paid by buyers will

answer

decrease, and the quantity sold in the market will increase.

question

unit 2 97

answer

...

question

unit 2 98

answer

question

unit 2 99

answer

question

unit 2 100

answer

question

One economist has argued that rent control is "the best way to destroy a city, other than bombing." Why would an economist say this?

answer

He fears that rent control will eliminate the incentive to maintain buildings, leading to a deterioration of the city.

question

The minimum wage has its greatest impact on the market for

answer

teenage labor

question

Which of the following is correct? Price controls

answer

often hurt those they are designed to help

question

A $2.00 tax levied on the sellers of birdhouses will shift the supply curve

answer

downward by less than $2.00

question

If a tax is levied on the buyers of a product, then the demand curve will

answer

shift down

question

unit 2 106

answer

question

Unti 2 107

answer

question

Unit 2 108

answer

question

A tax burden falls more heavily on the side of the market that

answer

is more inelastic

question

The term tax incidence refers to

answer

the distribution of the tax burden between buyers and sellers.

1 of 110

question

In a market economy

answer

supply and demand determine prices and prices, in turn, allocate the economy's scarce resources.

question

Which of the following statements is correct?

answer

Buyers determine demand, and sellers determine supply.

question

A group of buyers and sellers of a particular good or service is called a

answer

market

question

most markets in the economy are

answer

highly competitive

question

In a comparative market, the quantity of a product produced and the price of the product are determined by

answer

all buyers and all sellers

question

In a competitive market, buyer

answer

and sellers are price takers

question

An example of a perfectly competitive market would be the

answer

soybean market

question

A monopoly is a market with one

answer

seller, and that seller sets the price

question

the quantity demanded of a good is the amount that buyers are

answer

willing and able to purchase.

question

An increase in quantity demanded

answer

results in a movement downward and to the right along a demand curve.

question

An increase in the price of a good will

answer

decrease quantity demanded.

question

answer

the law of demand

question

A table that shows the relationship between the price of a good and the quantity demanded of that good is called

answer

demand schedule

question

When we move along a given demand curve,

answer

all non-price determinants of demand are held constant.

question

The demand curve for a good is a line that relates

answer

price and quantity demanded.

question

When drawing a demand curve,

answer

price is measured along the vertical axis, and quantity demanded is measured along the horizontal axis.

question

The market demand curve

answer

is the sum of all individual demand curves.

question

An increase in demand is represented by a

answer

rightward shift of a demand curve.

question

A leftward shift of a demand curve is called a

answer

decrease in demand.

question

Which of the following changes would not shift the demand curve for a good or service?

answer

a change in the price of the good or service

question

The demand curve for coffee shifts

answer

When a determinant of the demand for coffee other than the price of coffee changes

question

Which of the following is not a determinant of demand?

answer

The price of a resource that is used to produce the good

question

You lose your job and, as a result, you buy fewer iTunes music downloads. This shows that you consider iTunes music downloads to be a

answer

normal good.

question

Soup is an inferior good if the demand

answer

for soup falls as income rises

question

Two goods are substitutes when a decrease in the price of one good

answer

decreases the demand for the other good.

question

If textbooks and study guides are complements, then an increase in the price of textbooks will result in

answer

fewer study guides being sold.

question

unit 2 27

answer

question

unit 2 28

answer

question

unit 2 29

answer

question

unit 2 30

answer

question

The quantity supplies of a good is the amount that

answer

sellers are willing and able to sell

question

When the pice of a good or service changes,

answer

there is a movement along a given supply curve.

question

An increase in the price of blueberries would lead to an

answer

increased supply of blueberries and a movement up and to the right along the supply curve for blueberries.

question

answer

is referred to as the law of supply.

question

A supply curve slope upward because

answer

an increase in price gives producers an incentive to supply a larger quantity.

question

A rightward shift of a supply curve is called an

answer

increase in supply.

question

unti 2 37

answer

question

Lead is an important input in the production of crystal. If the price of lead decreases, then we would expect the supply of

answer

crystal to increase

question

A decrease in the number of sellers in the market causes

answer

the supply curve to shift to the left.

question

The unique point at which the supply and demand curves intersect is called

answer

equilibrium

question

In markets, prices move toward equilibrium because of

answer

the actions of buyers and sellers

question

Which of the following event must cause equilibrium quantity to rise?

answer

Demand and supply both increase

question

If the demand for a product increases, then we would expect equilibrium price and

answer

equilibrium quantity both to increase.

question

Suppose that demand for a good increases and, at the same time, supply of the good decreases. What would happen in the market for the good?

answer

Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous.

question

Unit 2 45

answer

question

unit 2 46

answer

question

unit 2 47

answer

question

A decrease in input costs to firms in a market will result in a

answer

decrease in equilibrium price and an increase in equilibrium quantity.

question

Exceptionally favorable growing conditions in the vineyards of Napa Valley would cause an

answer

increase in the supply of wine, decreasing price

question

Which of the following events would unambiguously cause a decrease in the equilibrium price of cotton shirts?

answer

An increase in the price of wool shirts and an increase in the price of raw cotton.

question

If consumers view cappuccinos and lattes as substitutes, what would happen to the equilibrium price and quantity of lattes if the price of cappuccinos falls?

answer

Both the equilibrium price and quantity would decrease.

question

If macaroni and cheese is an inferior good, what would happen to the equilibrium price and quantity of macaroni and cheese if consumers incomes rise?

answer

Both the equilibrium price and quantity would decreases.

question

unit 2 53

answer

question

unit 2 54

answer

question

unit 2 55

answer

question

The signals that guide the allocation of resources in a market economy are

answer

prices

question

In general, elasticity is a measure of

answer

how much buyers and sellers respond to changes in market conditions.

question

Demand is said to be price elastic if

answer

buyers respond substantially to changes in the price of the good.

question

Goods with many close substitutes tend to have

answer

more elastic demands.

question

For a good that is a necessity,

answer

demand tends to be inelastic.

question

Which of the following is likely to have the most price elastic demand?

answer

lattes

question

Which of the following is likely to have the most price inelastic demand?

answer

lightbulbs

question

A person who takes a prescription drug to control high cholesterol most likely has a demand for that dug that is

answer

inelastic.

question

The midpoint method is used to compute elasticity because it

answer

gives the same answer regardless of the direction of change.

question

unit 2 65

answer

question

answer

.67

question

answer

elastic

question

If the price elasticity of demand for a good is 2.0, then a 10 percent increase in price results in a

answer

20% decrease in the quantity demanded.

question

For a particular good, a 2% increase in price causes a 12% decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

answer

The good is a luxury.

question

unit 2 70

answer

question

An increase in price causes an increase in total revenue when demand is

answer

inelastic.

question

On a downward-sloping linear demand curve, total revenue reaches its maximum value at the

answer

midpoint of the demand curve.

question

When demand is elastic, an increase in price will cause

answer

a decrease in total revenue.

question

When demand is inelastic, a decrease in price will cause

answer

a decrease in total revenue.

question

unit 2 75

answer

question

unit 2 76

answer

question

Income elasticity of demand measures how

answer

the quantity demanded changes as consumer income changes.

question

unit 2 78

answer

question

unit 2 79

answer

question

Cross-price elasticity of demand measures how

answer

the quantity demanded of one good changes in response to a change in the price of another good.

question

Which of the following expressions represents a cross-price elasticity of demand?

answer

percentage change in quantity demanded of bread divided by percentage change in price of butter.

question

If the cross-price elasticity of two goods is negative, then the two goods are

answer

complements

question

The price elasticity of supply measures how responsive

answer

sellers are to a change in price.

question

A key determinant of the price elasticity of supply is the

answer

time horizon

question

When a supply curve is relatively flat,

answer

supply is relatively elastic.

question

If a 20% change in price results in a 15% change in quantity supplies, then the price elasticity of supply is about

answer

.75, and supply is inelastic

question

Because the demand for wheat tends to be inelastic, the development of a new, more productive hybrid wheat would ten to

answer

decrease the total revenue of wheat farmers.

question

Knowing that the demand for wheat is inelastic, if all farmers voluntarily did not plant wheat on 10% of their land, then

answer

wheat farmers would experience an increase in their total revenue.

question

In the market for oil in the short run, demand

answer

and supply are both inelastic.

question

In a competitive market free of government regulation,

answer

Price adjusts until quantity demanded equals quantity supplied.

question

A legal maximum on the price at which a good can be sold is called a price

answer

ceiling

question

If a price ceiling is not binding, then

answer

there will be no effect on the market price or quantity sold.

question

A price ceiling will be binding only if it is set

answer

below the equilibrium price.

question

If the government removes a binding price ceiling from a market, then the price paid by buyers will

answer

increase, and the quantity sold in the market will increase.

question

A legal minimum on the price at which a good can be sold is called a

answer

price floor

question

If the government removes a binding price floor from a market, then the price paid by buyers will

answer

decrease, and the quantity sold in the market will increase.

question

unit 2 97

answer

...

question

unit 2 98

answer

question

unit 2 99

answer

question

unit 2 100

answer

question

One economist has argued that rent control is "the best way to destroy a city, other than bombing." Why would an economist say this?

answer

He fears that rent control will eliminate the incentive to maintain buildings, leading to a deterioration of the city.

question

The minimum wage has its greatest impact on the market for

answer

teenage labor

question

Which of the following is correct? Price controls

answer

often hurt those they are designed to help

question

A $2.00 tax levied on the sellers of birdhouses will shift the supply curve

answer

downward by less than $2.00

question

If a tax is levied on the buyers of a product, then the demand curve will

answer

shift down

question

unit 2 106

answer

question

Unti 2 107

answer

question

Unit 2 108

answer

question

A tax burden falls more heavily on the side of the market that

answer

is more inelastic

question

The term tax incidence refers to

answer

the distribution of the tax burden between buyers and sellers.

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