Graphing
The government announces a decrease in excise taxes. What will happen to demand/supply curves?
Supply shifts rightward
Inferior goods
What is the equation for economic profit?
Total Revenue - (Explicit Costs + Implicit Costs) OR Total Revenue - Opp. Costs
According to the Law of Supply, price has a negative relationship with quantity. (True/False)
False - positive
Consumers expect lower income in the future due to the economy. What will happen to the demand/supply curve?
Demand shifts leftward
Substitutes in production deal with consumer demand. (True/False)
False
TR(Q)=120Q−2Q^2
a) What is MR?
b) What is MR when Q=20?
c) At what quantity does MR equal zero?
b) MR (20) = 40
c) Q = 30
Marginal revenue is the ________ of total revenue, and the _____ of the TR curve.
Derivative; slope
Orange farmers expect prices to drop in the future. What will happen to the demand/supply curve?
Supply shifts rightward
If consumers expect prices to increase in the future, then the current demand will increase. (True/False)
True
What is the arc formula for the price elasticity of demand?
((Q2 - Q1)/(Q1 + Q2)/2) / ((P2 - P1)/(P1 + P2)/2)
If the interest rate is 5% and cash flows are $3,000 at the end of year one and $5,000 at the end of year two, then the present value of these cash flow is:
PV = $7,392.29
Consumers learn that dark chocolate is healthier for you. However, cocoa, which helps produce dark chocolate bars, has become increasingly expensive. What will happen to the demand/supply curves?
Demand shifts rightward, supply shifts leftward
If supply shifts to the right due to increased productivity, assuming no government involvement, what type of shifter is occurring?
Technological advancements
Macy's has a 10% off sale on tuxedos, causing a 10% increase in the quantity demanded for tuxedos. Please calculate the price elasticity of demand and if the good is elastic or inelastic.
E.d. = -1
Unit elastic (abs. value of -1 is 1)
If MB is less than MC, what should the firm do?
In the market for apples, farming equipment has become more expensive, causing an increase in the price of apples. What will happen to the demand/supply curves?
Movement upwards along the demand curve
If the price of a complement in production increases, what happens to the other related good?
Supply of other good increases
Qdx = 4000 - 500Px - 10Py + 3Pz + 6M. Please state what type of goods and what type of income is listed.
Px - negative (law of demand)
Py - complementary good (-)
Pz - substitute good (+)
M - normal income (+)
For an inelastic good, if prices decrease, what will happen to total revenue?
TR decreases