question

2. What impact did the earthquake in Chile in 2010 have on the copper industry?

answer

Supply decreased, prices increased

question

2. An increase in the price of good X will cause a decrease in the demand for good X given that demand is usually an inverse functional relationship.

answer

False

question

2.If the price of good X increases and the demand for good Y increases in response, what can we say about X and Y?

answer

X and Y are substitutes

question

2. What impact on the demand curve for good X does an increase in income have if X is a normal good?

answer

Curve shifts to the right

question

2. Why can't we derive the market demand curve by summing up all the individual demand curves in a market?

answer

Tastes and preferences vary across individuals

There is more than one consumer

There is more than one good

There is more than one consumer

There is more than one good

question

2. Given this demand function:

QDX = 3 - 4PX - 2PY + 0.2I - 0.04EXP

QDX = 3 - 4PX - 2PY + 0.2I - 0.04EXP

answer

X is a normal good

X is complementary with Y

X is complementary with Y

question

2. A decrease in the price of Y will cause an increase in the quantity supplied of Y given that supply is usually a direct functional relationship.

answer

False

question

2. If the price of good X increases and the supply for good Y decreases in response, what can we say about X and Y?

answer

The inputs used to make Y can also be used to make X

X and Y are related goods

X and Y are related goods

question

2. What impact does an expected increase in the price of X have on the supply curve for X now?

answer

Supply shifts left

question

2. What results when the price of X is below the equilibrium price?

answer

Price will tend to go up in response

Shortage

Shortage

question

2.

QD = 20 - 4PX

QS = -8 + 3PX

What is the equilibrium price of X?

QD = 20 - 4PX

QS = -8 + 3PX

What is the equilibrium price of X?

answer

4 ( with margin: 0)

question

2.

QD = 20 - 4PX

QS = -8 + 3PX

What is the equilibrium quantity of X?

QD = 20 - 4PX

QS = -8 + 3PX

What is the equilibrium quantity of X?

answer

4 (with margin: 0)

question

2. If consumer incomes increase and input prices for X, a normal good, increase, what can we say will happen to equilibrium price?

answer

Increases

question

2. If the consumer tastes for SUVs decreases because of a surge in concern for the environment and the number of producers of SUVs declines because of bankruptcies and mergers, what can we expect to happen to equilibrium price?

answer

Depends on the magnitudes of the shifts in supply and demand

question

2. A price floor policy causes what market problem? ______________

answer

surplus

question

2. Match the cause with the effect in the breakfast cereal market:

Price of bagels decreases:

Price of corn rises:

Consumers expect breakfast cereal prices will be higher in the future:

An improvement in the productive technology of breakfast cereal reduces production costs:

Price of bagels decreases:

Price of corn rises:

Consumers expect breakfast cereal prices will be higher in the future:

An improvement in the productive technology of breakfast cereal reduces production costs:

answer

Decrease Equilibrium price and quantity

Increase equilibrium price and decrease equilibrium quantity

Increase equilibrium price and quantity

Decrease equilibrium price and Increase equilibrium quantity

Increase equilibrium price and decrease equilibrium quantity

Increase equilibrium price and quantity

Decrease equilibrium price and Increase equilibrium quantity

question

3. What synonym for elasticity does Professor Davidsson like to use to better understand the concept?

answer

responsiveness

question

3. Which of these methods for calculating price elasticity of demand requires the demand function?

answer

point price elasticity

question

3. Which of these methods for calculating price elasticity of demand requires the demand function?

answer

point price elasticity

question

3. As a price setter of good X, you must determine whether to lower or raise the price of your good. If you wish to increase revenue and a study finds that demand for your good is price inelastic, what should you do?

answer

Raise the price of good X

question

3. Without knowing the estimated value of the price elasticity of demand for laundry detergent, what would you predict it would be? (think in terms of the determinants)

answer

price inelastic

question

3. If you raise the price of good X from $2 to $3 and sell only 6 at $3 when you would have sold 10 at $2, what happens to total revenue?

answer

TR increases with the price increase

question

3. Demand for good X will be both price inelastic and price elastic if the demand curve is linear and downward sloping.

answer

True

question

3. What value of price elasticity of demand is a perfectly inelastic good?

answer

0

question

3. What does the demand curve look like for a good whose demand is perfectly elastic?

answer

Horizontal

question

3 If the income elasticity of demand for good X is 0.3, what can we say about X?

answer

X is a normal good and a necessity

question

3 If the cross price elasticity of cheddar cheese for American cheese is 0.9 and the cross price elasticity of American cheese for cheddar cheese is 2.6, what do we know about cheddar and American cheese?

answer

...

question

3 If the cross price elasticity of cheddar cheese for American cheese is 0.9 and the cross price elasticity of American cheese for cheddar cheese is 2.6, what do we know about cheddar and American cheese?

answer

Cheddar and American cheese are substitutes

American cheese consumers think that cheddar cheese is substitutable more than cheddar cheese consumers think American cheese is substitutable

American cheese consumers think that cheddar cheese is substitutable more than cheddar cheese consumers think American cheese is substitutable

question

3 The studies in the textbook found the demand for what good to be the most price inelastic?

answer

paper towels

question

3 Data for good X:

Price elasticity of demand = -0.9

Income elasticity of demand = 0.5

Cross price elasticity of demand between X and Y = -0.98

What can we determine from this data?

Price elasticity of demand = -0.9

Income elasticity of demand = 0.5

Cross price elasticity of demand between X and Y = -0.98

What can we determine from this data?

answer

X is a normal good

Demand for X is price inelastic

X and Y are complementary goods

X is a necessity

Demand for X is price inelastic

X and Y are complementary goods

X is a necessity

question

4 What are potential pitfalls to relying on expert opinion for consumer demand estimation?

answer

Experts might have a limited view of the entire set of factors influencing demand

People close to the industry have an incentive to overstate consumer demand

People close to the industry have an incentive to overstate consumer demand

question

4 Which of the following approaches ask consumers to rank or choose among product attributes, making it analogous to or an attempt to model the indifference curve in economic theory?

answer

conjoint analysis

question

4 Many experiments in the social sciences (including economics) are very expensive, time-consuming, and complex to perform which is why most economists use econometric or statistical techniques to estimate relationships between economic variables.

answer

True

question

4 Simple regression analysis estimates the relationship between two variables, the equation of which is often called the line of best fit in graphical form.

answer

True

question

4 Which statistic is used to determine whether or not a coefficient is likely something other than 0?

answer

T-test

question

4 Which statistic is used to determine the goodness of fit for the entire equation that accounts for degrees of freedom?

answer

Adjusted R2

question

5 The production function is a mathematical relationship between inputs and output and does not include any information about costs.

answer

True

question

5 What is true in the short run?

answer

...

question

5 The production function is a mathematical relationship between inputs and output and does not include any information about costs.

answer

True

question

5 When the marginal product curve is decreasing, but still above 0, what else is (always) true?

answer

Total product is increasing

Adding the variable input increases output, but increases output less than the previous variable input added

Diminishing returns are occurring

Adding the variable input increases output, but increases output less than the previous variable input added

Diminishing returns are occurring

question

5 Short run cost functions are U-shaped because cost functions are derived from production functions which are based on diminishing returns.

answer

True

question

5 Empirical evidence indicates that the vast majority of businesses and industries experience rising cost curves which means the economics proposition that businesses produce in the area of diminishing returns is correct.

answer

False

question

6 Which of the following are influences on a company's input substitution decision?

answer

the technology or productivity of inputs

the scarcity of inputs

the prices of inputs

the competition in the industry

the scarcity of inputs

the prices of inputs

the competition in the industry

question

6 X-inefficiency results because of a lack of competition.

answer

True

question

6 Which of the following are true in the long run?

answer

The Minimum efficient scale isn't reached until all economies of scale are exhausted

A U-shaped LRATC means that economies of scale and diseconomies of scale are present

The LRATC curve is the envelope or minimum points of several SRATC curves

There are no fixed costs

A U-shaped LRATC means that economies of scale and diseconomies of scale are present

The LRATC curve is the envelope or minimum points of several SRATC curves

There are no fixed costs

question

5 What is true in the short run?

answer

The production function displays diminishing returns

At least one input is variable, and at least one input is fixed

At least one input is variable, and at least one input is fixed

question

The ______________ is the slope of the ______________

answer

marginal product curve

total product curve

total product curve

question

3 Calculate the arc price elasticity of demand using the following data:

P1 = $4.50, Q1 = 36

P2 = $5.50, Q2 = 28

P1 = $4.50, Q1 = 36

P2 = $5.50, Q2 = 28

answer

-1.25 (with margin: 0)

question

3. If you raise the price of good X from $2 to $3 and sell only 6 at $3 when you would have sold 10 at $2, what do we know about the marginal revenue and price elasticity of demand for X?

answer

MR is > 0, demand for X is price elastic