All
Which big idea is most important to the economic way of thinking?
Scarcity
Shoppers choosing a checkout line is an example of what?
Spontaneous order
When the price of olive oil increases, what happens to the demand curve for corn oil?
Demand curve shifts right
Elasticity of demand measures what?
sensitivity of buyers to price changes
Price elasticity of supply measures the % change in quantity supplied of a good divided by % change in________
price of the good
Economists measure the opportunity cost as the value of the what?
Best forgone use of those resources
Who has the comparative advantage in making trucks?
Alpha: 300 cars or 150 trucks
Beta: 1500 cars or 600 trucks
Beta
If everyone thinks the price for toilet paper will go up next week, what will happen to the demand for TP today?
the demand would increase
If price elasticity of demand is perfectly inelastic, then the demand curve appears as a__________
Other things being equal, if a household income decreases 10%, household demand for chicken increases 5% and the demand for steak decreases 20%. This information shows what about the goods?
normal vs inferior
steak is normal, chicken is inferior
Economic efficiency means what?
no change can make one person better off without making another person worse off
A higher price is associate with a decrease in quantity that buyers are willing and able to purchase. (other things being equal)
This is also known as:
Law of Demand
Improvement in technology of making a good would impact demand or supply?
Increase or decrease?
increase in supply
If % change in oil price was 10% and the %change in quantity demand was 2%. The elasticity of demand equals what?
.20%
(%change D/% change P)
Use midpoint formula to solve:
Qd1=40
Qd2=60
p1=$4.00
p2=$2.00
-.60
Entrepreneurship and investment are two methods of what?
Increasing production potential
A demand curve shows how the quantity demanded of a good changes as ______changes
market price
If price of Apple phone goes down, what happens to demand for samsung phones?
demand decreases
If price elasticity of demand is inelastic, then it value is what?
Less than one
If price elasticity of demand is elastic then its value is what?
greater than 1
Graph question #1: What idea does point E represent?
inefficient use of resources
Graph question #2
Which graph shows an increase in demand?
II
In a normal model of demand and supply, a decrease in demand leads to ________in price and ________in quantity exchanged
Increase or decrease?
Decrease/ decrease
Solve for cross price elasticity:
Py1=$10
Py2=$14
Qdx1=20
Qdx2=22
.28
What is the extra credit option due before the start of the exam?
The Wealth of Nations essay