Definitions
Graph
WORD PROB
Elasticity and inelasticity
Supply & Demand
100
What are the three Price Discriminations?
First-degree discrimination, the company charges random possible prices for each unit consumed for no reason.
Second-degree discrimination involves discounts for products or services bought in bulk.
Third-degree discrimination reflects different prices for different consumer groups.
100
This firm is a ____ taker, earning ____ economic profit.
This firm is a price searcher, earning negative economic profit.
100
After a hurricane in Florida knocked out the regional water supply for several days, the demand for bottled water increased sharply. In a market economy, how will this increase in demand affect the equilibrium price and quantity of bottled water?
A, Price will increase, and quantity will decrease.
B, Price will decrease, and quantity will decrease.
C, Price will decrease, and quantity will increase.
D, Price will increase, and quantity will increase.
D, Price will increase, and quantity will increase.
100
Of the following goods, which is likely to have the most elastic demand?
a) candy
b) heroine
c) antiretroviral drugs for treating HIV
d) gasoline
b) heroine
100
Consider the supply curve for sour cream. If the price of sour cream falls, then…
a) the quantity supplied will fall.
b) the quantity supplied will rise.
c) the supply will rise.
d) none of the above.
a) the quantity supplied will fall.
200
Under rent control, landlords cease to be responsive to tenants' concerns about the quality of the housing because____
A, with shortages and waiting lists, they have less incentive to maintain and improve their property.
B, they become resigned to the fact that many of their apartments are going to be vacant at any given time.
C, with rent control the government guarantees landlords a minimal level of profit.
D, with rent control it becomes the government's responsibility to maintain rental housing.
A, with shortages and waiting lists, they have less incentive to maintain and improve their property.
200
This firm is a ______, earning _____ economic profit
This firm is a price taker, earning zero economic profit.
200
If the market for movie tickets is in equilibrium, with a price of $10, and the government imposes a price ceiling of $12, the result will be...
A. a shortage of movie tickets
B a surplus of movie tickets
C equilibrium
D deadweight loss
C equilibrium
200
A $1 per pound tax is imposed on cucumbers. The own-price elasticity of demand for cucumbers is 1.5, and the elasticity of supply for cucumbers is 0.7. Which of the following is correct?
a) The burden of the tax will fall mostly on consumers. b) The burden of the tax will fall mostly on producers. c) The burden of the tax will fall equally on consumers and producers.
d) The burden of the tax will be zero.
b) The burden of the tax will fall mostly on producers.
200
If the surgeon general announces that wearing shoes is bad for your posture, which of the following will occur?
a) Demand for shoes will shift to the right.
b) Demand for shoes will shift to the left.
c) Quantity of shoes demanded will rise.
d) The supply of shoes will fall.
b) Demand for shoes will shift to the left.
250
Producer Surplus is___
A. The Same as Profit
B. The difference between the price in which a good is sold and the marginal cost of producing it.
C. The difference between the height of the demand curve and price.
D. The difference between total cost and fixed costs.
B. The difference between the price in which a good is sold and the marginal cost of producing it.
250
Which graph will have consumers suffering the greatest loss of consumer surplus if a tax is imposed?
Graph B
250
It's the late 1970s, and the market for movies is in equilibrium. Two things happen at the same time: Improvements in technology lead to a much better movie experience, due to better special effects and audio, resulting in more crowd-pleasing movies and improvements in technology reduces the costs of making and distributing movies.
A Price rises, quantity is indeterminate.
B, Price rises, quantity falls.
C, Price is indeterminate, quantity rises.
D Price falls, quantity is indeterminate.
C, Price is indeterminate, quantity rises.
250
Suppose the equilibrium price of toilets is $250. The government imposes a $600 minimum price for each toilet. Which of the following is not likely to occur?
a) Toilet manufacturers produce more toilets than consumers are willing to buy.
b) Consumers prefer to keep old, inefficient, unreliable toilets rather than replacing them with new ones.
c) Toilet manufacturers produce the lowest-quality toilets possible, while also complying with regulations.
d) The market in used toilets (removed from renovation projects or demolition sites) grows larger (meaning more buyers and sellers).
c) Toilet manufacturers produce the lowest-quality toilets possible, while also complying with regulations.
250
Suppose the market for smartphones is in equilibrium. A new battery technology is invented which makes phones last a week without needing to be recharged. What happens in the market for smartphones?
a) Demand shifts to the right, price rises, quantity rises.
b) Demand shifts to the left, price falls, quantity falls.
c) Supply shifts to the right, price falls, quantity rises.
d) Supply shifts to the left, price falls, quantity rises.
a) Demand shifts to the right, price rises, quantity rises.
300
What is A?, What is B + C?,What is A+B+C?
A, Profit
B + C, Total Cost
A+B+C, Total Revenue
300
the attatched graph depicts a firm selling output at a price of 8$
The firm will produce in the short run, but exit in the long run.
300
Output of _____ , Total Revenue of _____
Output of 6 million , Total Revenue of 48 million
300
Your income rises by 10%, and the quantity of raisins that you purchase falls by 5%. Which of the following is correct?
a) The income elasticity of demand for raisins is -0.5, and raisins are an inferior good.
b) The income elasticity of demand for raisins is 0.5, and raisins are a normal good.
c) The income elasticity of demand for raisins is -2, and raisins are an inferior good.
d) The income elasticity of demand for raisins is 2, and raisins are a normal good.
a) The income elasticity of demand for raisins is -0.5, and raisins are an inferior good.
300
A tornado destroys several carpet factories in North Georgia. Which of the following occurs?
a) The quantity of carpet supplied rises.
b) The price of carpet falls.
c) The carpet supply curve shifts to the left.
d) The carpet supply curve shifts to the right.
c) The carpet supply curve shifts to the left.
500
The firm is price____, and is earning ______ economic profit.
The firm is a price, and is earning negative economic profit.
500
What do letters A through F represent
A is tax per unit legally assigned to consumers, B is Tax revenue, C is consumer surplus E is producer surplus, F is deadweight loss
500
Your income rises by 10%, and the quantity of raisins that you purchase falls by 5%. Which of the following is correct?
a) The income elasticity of demand for raisins is -0.5, and raisins are an inferior good.
b) The income elasticity of demand for raisins is 0.5, and raisins are a normal good.
c) The income elasticity of demand for raisins is -2, and raisins are an inferior good.
d) The income elasticity of demand for raisins is 2, and raisins are a normal good.
a) The income elasticity of demand for raisins is -0.5, and raisins are an inferior good.
500
The price of internet access rises from $50 per month to $70 per month. The quantity of streaming service subscriptions falls from 200 million to 175 million. What is the Arc Cross-Price Elasticity of Demand?
a) 0.4
b) -0.4
c) -0.3125
d) 0.3333
A, 0.4
500
If the price of chicken food (fed to chickens) goes up, which of the following will happen in the market for chicken sandwiches?
a) Supply will shift to the right, and price will fall.
b) Supply will shift to the left, and price will rise.
c) Demand will shift to the right, and price will rise.
d) Demand will shift to the left, and price will fall.
b) Supply will shift to the left, and price will rise.