Pick one, Pick all
A decrease in tuition fees will decrease University of Toronto's total revenue if the demand for college education is price
a. elastic
b. unit elastic
c. inelastic
c. inelastic
Show the effect of price and quantity of homes in Toronto as more people are looking to move out of Toronto and into the suburbs.
Therefore: Price & Quantity Decreases
A state in which the supply and demand for a given good or service are in balance is called:
equillibrium
Which of the following points is not attainable under the current situation?
E
What are the 3 basic economic questions?
What to produce?
How to produce?
For whom to produce?
Which of the following products would most likely have inelastic demand?
a. luxury sports cars
b. vacation packages
c. life saving medication
d. pumpkin pie
c. life saving medication
Draw a graph indicating the effects for the gold market when the price of gold continues to rise.
Price = Shift on the curve and thus creating a surplus of gold.
An economic term that describes a good whose demand drops when people's income rise.
Inferior Good
Calculate the opportunity cost when moving from 50 Manufactured Goods to 70?
(Picture 2)
See Picture
What are the 4 economic systems?
Traditional Economy
Market Economy
Command Economy
Mixed Economy
Which of the following best defined opportunity cost?
a. It is the cost of producing those goods most desired by a given economy.
b. It is the amount of one product that must be given up in order to produce an additional unit of another product.
c. It is the cost of labour used within the production process.
d. It is the use of the most cost-effective method during production.
b. It is the amount of one product that must be given up in order to produce an additional unit of another product.
Draw a graph that would showcase elastic demand an market with elastic demand.
See Picture
This measures a variable's sensitivity to a change in another variable. It most commonly refers to the relationship between price and the quantity demanded / supplied.
Price
If the price rises by 25 %, the quantity demanded falls by 20 %. Calculate the price elasticity of demand.
Elasticity = |(-20%)/(25%)| = |-0.8| = 0.8
•Two Products
•Fixed Resources & Technology
•Full Production
If both price and quantity increased, what do we know for sure?
a. There was an increase in supply
b. There was an increase in demand
c. There was a decrease in supply
d. There was a decrease in demand
b. There was an increase in demand
Show the effect on Price and Quantity for milk when the cost of feed for cows increase and a scientific study reviews that drinking two glasses of milk a day helps to reduce weight.
Supply (Decrease), Demand (Increase)
Therefore: Price Increases, Quantity Indeterminate
The error of assuming that because one event followed another, the first event must have caused the second is called:
Post Hoc Fallacy
Given the graph, is the item elastic or inelastic?
Price Elasticity of Demand = (50-70/60) / (12-8/10) = (-20/60) / (4/10) = -0.33 / 0.4 = -0.83
Therefore it is inelastic.
What are 3 factors that may shift the demand curve (change in demand)?
1.Number of Buyers
2.Income
3.Prices of Other Products – Substitution Effect
4.Consumer Preferences
5.Consumer Expectations
As the price of good A rises, the demand for good B shifts right. Which of these statements are true?
a. A is a factor used in the production of B.
b. A and B are complements in production.
c. A and B are substitutes.
d. A and B are complementary goods.
e. A and B are substitutes in production.
c. A and B are substitutes.
Show the effect on price and quantity of iPhone cases if the price of iPhones decrease by 20%. At the same time, producers believe that the price of iPhone cases will decrease in the future.
Supply (Increase), Demand (Increase)
Therefore: Price - Indeterminate, Quantity - Increase
This explains how consumers make decisions based on the additional satisfaction they receive from consuming one more unit of a good or service.
Marginal Utility Theory
Using the midpoint formula, answer the following question.
At the initial price of $10, the quantity demanded is 100. When the price rises to $20, the quantity demanded falls to 90. What is the elasticity? Is it elastic or inelastic?
Elasticity = -.158 , therefore it is inelastic
•Economic Freedom
•Economic Equity
•Economic Efficiency
•Economic Growth
•Economic Security
•Economic Stability