Micro Econ Exam 2 Study Guide - Custom Scholars
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Micro Econ Exam 2 Study Guide

question
quantities
answer
The demand schedule for a good indicates the ___________ that will be purchased at alternative market prices
question
supply ; supplied
answer
According to the law of ________, there is a direct relationship between the price and quantity ____________.
question
supply
answer
Higher wage rates for the workers that assemble computers will reduce the __________ of microcomputers.
question
elastic
answer
Supply is said to be __________ when the quantity supplied is very responsive to changes in price.
question
percent ; percent
answer
The elasticity of supply is defined as the __________ change in quantity supplied divided by the ____________ change in price.
question
inelastic ; elastic
answer
Taxes on goods with (elastic, inelastic) demand curves will tend to raise more tax revenues for the government than taxes on goods with (elastic, inelastic) demand curves.
question
stay the same ; decrease
answer
If the supply curve for aspirin is perfectly elastic, then a reduction in demand will cause the equilibrium price to (increase, decrease, stay the same) and the equilibrium quantity to (increase, decrease, stay the same)
question
increase ; stay the same
answer
If the demand curve for a life-saving medicine is perfectly inelastic, then a reduction in supply will cause the equilibrium price to ( increase, decrease, stay the same) and the equilibrium quantity to (increase, decrease, stay the same)
question
a change in supply
answer
A change in price of a good or service typically causes a (change in quantity demanded or supplied; change in demand or supply) for that specific good or service.
question
equilibrium
answer
The ____________ is the quantity where quantity demanded and quantity supplied are equal at a certain price.
question
excess
answer
If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. This is known as (excess, surplus ) demand.
question
constant
answer
The term "ceteris paribus" means that all variables except those specified are (variable, constant)
question
quantity demanded ; price
answer
The price elasticity of demand measures the responsiveness of (Quantity demanded; demand) to a change in (price, quantity)
question
4.25
answer
Suppose that Bobo purchases 1 pizza per month when the price is $19 and 3
pizzas per month when the price is $15. What is the price elasticity of Bobo's demand curve?
question
cross-price elasticity ; -3
answer
A 10 percent decrease in the price of potato chips leads to a 30 percent increase in the quantity of soda demanded. It appears that (cross price elasticity, income elasticity, demand elasticity) for soda is (-3, 9, -5)
question
increasing ; inelastic
answer
The price elasticity of demand for tickets to local baseball games is estimated to be equal to 0.89. In order to boost ticket revenues, an economist would advise (increasing; decreasing) the price of game tickets because demand is (elastic, inelastic, unitary)
question
decrease
answer
A 25 percent decrease in the price of breakfast cereal leads to a 20 percent increase in the quantity of cereal demanded. As a result, Total Revenue will (increase, decrease, remain constant)
question
inferior
answer
A 10 percent increase in income leads to a 15% decrease in the quantity of macaroni and cheese demanded but no change in the price of macaroni and cheese. From this information, we can assume macaroni is an (inferior, normal) good.
question
not very ; price
answer
When demand is inelastic, consumers are (very, not very) responsive to changes in (price, quantity demanded.)
question
greater
answer
If cola and iced tea are good substitutes for consumers, then it is likely that their cross price elasticities are (lesser, greater) than zero.
question
equilibrium price
answer
The ___________ (equilibrium price, market price) is the only price where quantity demanded is equal to quantity supplied.
question
quantity
answer
A supply curve is a graphical illustration of the relationship between price, shown on the vertical axis, and ____________, (quantity, demand) shown on the horizontal axis.
question
3
answer
Billy Bob's Barber Shop knows that a 5 percent increase in the price of their haircuts results in a 15 percent decrease in the number of haircuts purchased. What is the elasticity of demand facing Billy Bob's Barber Shop? (3, 0.10)
question
elastic
answer
Supply is said to be ____________ (elastic, inelastic) when the quantity supplied is very responsive to changes in price
question
inelastic
answer
Demand is said to be _____________ (elastic, inelastic) when the quantity demanded is not very responsive to changes in price.
question
elastic
answer
Youth smoking seems to be more __________ (elastic, inelastic) than adult smoking—that is, the quantity of youth smoking will fall by a greater percentage than the quantity of adult smoking in response to a given percentage increase in price.
question
elastic
answer
A price cut will increase the total revenue a firm receives if the demand for its product is: (elastic, inelastic)
question
fall and equilibrium price to stay the same
answer
If the supply curve for housing is perfectly inelastic, then a reduction in demand will cause the equilibrium price to: (fall and the equilibrium quantity to stay the same, fall and the equilibrium quantity to fall).
question
cross-price elasticity of demand for soda is -3
answer
A 10 percent decrease in the price of potato chips leads to a 30 percent increase in the quantity of soda demanded. It appears that: (cross-price elasticity of demand for soda is -3, elasticity of demand for potato chips is 3).
1 of 29
question
quantities
answer
The demand schedule for a good indicates the ___________ that will be purchased at alternative market prices
question
supply ; supplied
answer
According to the law of ________, there is a direct relationship between the price and quantity ____________.
question
supply
answer
Higher wage rates for the workers that assemble computers will reduce the __________ of microcomputers.
question
elastic
answer
Supply is said to be __________ when the quantity supplied is very responsive to changes in price.
question
percent ; percent
answer
The elasticity of supply is defined as the __________ change in quantity supplied divided by the ____________ change in price.
question
inelastic ; elastic
answer
Taxes on goods with (elastic, inelastic) demand curves will tend to raise more tax revenues for the government than taxes on goods with (elastic, inelastic) demand curves.
question
stay the same ; decrease
answer
If the supply curve for aspirin is perfectly elastic, then a reduction in demand will cause the equilibrium price to (increase, decrease, stay the same) and the equilibrium quantity to (increase, decrease, stay the same)
question
increase ; stay the same
answer
If the demand curve for a life-saving medicine is perfectly inelastic, then a reduction in supply will cause the equilibrium price to ( increase, decrease, stay the same) and the equilibrium quantity to (increase, decrease, stay the same)
question
a change in supply
answer
A change in price of a good or service typically causes a (change in quantity demanded or supplied; change in demand or supply) for that specific good or service.
question
equilibrium
answer
The ____________ is the quantity where quantity demanded and quantity supplied are equal at a certain price.
question
excess
answer
If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. This is known as (excess, surplus ) demand.
question
constant
answer
The term "ceteris paribus" means that all variables except those specified are (variable, constant)
question
quantity demanded ; price
answer
The price elasticity of demand measures the responsiveness of (Quantity demanded; demand) to a change in (price, quantity)
question
4.25
answer
Suppose that Bobo purchases 1 pizza per month when the price is $19 and 3
pizzas per month when the price is $15. What is the price elasticity of Bobo's demand curve?
question
cross-price elasticity ; -3
answer
A 10 percent decrease in the price of potato chips leads to a 30 percent increase in the quantity of soda demanded. It appears that (cross price elasticity, income elasticity, demand elasticity) for soda is (-3, 9, -5)
question
increasing ; inelastic
answer
The price elasticity of demand for tickets to local baseball games is estimated to be equal to 0.89. In order to boost ticket revenues, an economist would advise (increasing; decreasing) the price of game tickets because demand is (elastic, inelastic, unitary)
question
decrease
answer
A 25 percent decrease in the price of breakfast cereal leads to a 20 percent increase in the quantity of cereal demanded. As a result, Total Revenue will (increase, decrease, remain constant)
question
inferior
answer
A 10 percent increase in income leads to a 15% decrease in the quantity of macaroni and cheese demanded but no change in the price of macaroni and cheese. From this information, we can assume macaroni is an (inferior, normal) good.
question
not very ; price
answer
When demand is inelastic, consumers are (very, not very) responsive to changes in (price, quantity demanded.)
question
greater
answer
If cola and iced tea are good substitutes for consumers, then it is likely that their cross price elasticities are (lesser, greater) than zero.
question
equilibrium price
answer
The ___________ (equilibrium price, market price) is the only price where quantity demanded is equal to quantity supplied.
question
quantity
answer
A supply curve is a graphical illustration of the relationship between price, shown on the vertical axis, and ____________, (quantity, demand) shown on the horizontal axis.
question
3
answer
Billy Bob's Barber Shop knows that a 5 percent increase in the price of their haircuts results in a 15 percent decrease in the number of haircuts purchased. What is the elasticity of demand facing Billy Bob's Barber Shop? (3, 0.10)
question
elastic
answer
Supply is said to be ____________ (elastic, inelastic) when the quantity supplied is very responsive to changes in price
question
inelastic
answer
Demand is said to be _____________ (elastic, inelastic) when the quantity demanded is not very responsive to changes in price.
question
elastic
answer
Youth smoking seems to be more __________ (elastic, inelastic) than adult smoking—that is, the quantity of youth smoking will fall by a greater percentage than the quantity of adult smoking in response to a given percentage increase in price.
question
elastic
answer
A price cut will increase the total revenue a firm receives if the demand for its product is: (elastic, inelastic)
question
fall and equilibrium price to stay the same
answer
If the supply curve for housing is perfectly inelastic, then a reduction in demand will cause the equilibrium price to: (fall and the equilibrium quantity to stay the same, fall and the equilibrium quantity to fall).
question
cross-price elasticity of demand for soda is -3
answer
A 10 percent decrease in the price of potato chips leads to a 30 percent increase in the quantity of soda demanded. It appears that: (cross-price elasticity of demand for soda is -3, elasticity of demand for potato chips is 3).
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