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| If the price elasticity of demand coefficient has a value of .11 then demand is: |
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| If demand is perfetly inelastic: |
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| The demand curve is vertical |
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| A demand curve that is elastic: |
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| Indicates that consumers make relatively large quantity adjustments to a price change |
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Suppose At&T reduces teh monthly price of its cell phone service from $31.20 to 28.80 and as a result the number of subscribers increased from 142,500 to 157,500 Along this portion of the demand curve, price elasticity of demand is equal to:
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| In question 4 above, what will happen to total consumer expenditures on AT&T cell phone service as a result of the price decrease: |
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Definition
| Expenditures will increase |
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| A perfectly elastic demand curve: |
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Term
| If there are few good, close substitues for a good, demand for that good is most likely to be: |
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Suppose the bookstore reduces the price it charges for condoms from $1.75 to $1.50 and as a result total spending on condoms increased. What can we conclude about the price elasticity of demand along this portion of the demand curve?:
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Graph 1
Between the prices of $24.60 and $23.40 which demand curve is more elastic |
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Graph 1
If the price of the good decreased from $24.60 and 23.40, along which demand curve would consumer spending on the good decrease?:
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Graph 1:
If the price of the good increased from $23.40 to $24.60 along D2 what would the price elasticity of demand be along this portion of the demand curve?"
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| If there are few close substitues for a good, demand tends to be elastic. T or F |
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| Demand tends to be relatively more inelastic along the lower, right hand protion of a straight line demand curve. T or F |
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| The shorter the time period availiable the more ______ demand tends to be |
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Term
| If the quantity suppolied is infinitely responsive to a change in price, supply is: |
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| If the market supply curve is upward sloping but relatively flat, then supply is: |
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Graph 2:
Which schedule depicts the supply of potatoes with a one year time period |
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Definition
| K (flat, slightly up and to the right) |
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Graph 2:
Which schedule most accuratley depicts the demand for all brands of cigarettes in the short run: |
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Definition
M (Vertical, Slightly up and to the left)
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Graph 2:
Which schedule depicts the supply for peaches in the short run (say within one year): |
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Definition
| J (Vertical, Slightly up and to the right) |
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Term
| For a given change in market demand, which of the following will have a relatively small price change and a relatively large quantity change: |
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Definition
| A highly elastic market supply curve |
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Suppose the wages paid to UD dining hall workers increased form $8.55 to $9.45 per hour and as a result, the number of job applicants increased by 8%. Along this portion of the supply curve, the supply elasticity coefficient is equal to:
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| When the market supply curve is highly inelastic an increase in demand will |
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Definition
| Cause a small increase in equilibrium quanitity and big increase in price |
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Term
| Suppose the supply of a good is inelastic. If the market demand decreases total spending on the good will increase. T or F |
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Definition
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| Which of the following has the most inelastic market supply curve: |
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Definition
| Cardiovascular (heart) surgeons |
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| Over the long run supply tends to become: |
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Graph 3:
A government imposed price floor is best illustrated by a price of: |
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Graph 3:
If the government were to impose a minimum price for milk in an effort to raise the incomes of dairy farmers, it would be depicted by setting a price equal to:
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Graph 3:
A government price ceiling on interest rates designed to make loanable funds more affordable for low-income individuals would cause:
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Definition
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| While price controls can often reduce the harm done to one group by a mandated price, they can impose harm to others. T or F |
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| Which of the following is an example of a price ceiling: |
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Definition
| Gasoline price controls implemented druing the 1970s and 80s |
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Definition
Profits over and above what an owner would have to receive in order to compensate him/her for the time and other resources he/she supplies to the business
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| Impicit costs do not incolce or require a direct, money expenditure. T or F |
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| The law of diminishing marginal returns states: |
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Definition
| As additional units of a variable input are employed with a set of fixed inputs, beyond some point output will increase by smaller and smaller amounts. |
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| The chinese merchants prover: "where there is no gain the loss is obvious" refers to which economic concept discussed in class |
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| Average total cost (ATC) is at all output levels alawyas below marginal cost (MC). T or F |
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Definition
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| As output increases, the difference between ATC and average variable cost (AVC) increases. T or F |
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| If a firm's product selling price is ____ the minimum point of its ATC, the firm would be earning at least a normal profit |
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| Which of the following causes the short-run average toatal cost curve to increase at high levels of output? |
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Definition
| rapidly rising average variable cost |
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Graph 4:
The vertical distance between ATC and AVC represents |
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Definition
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| In the short run the firm would receive economic profits if price were: |
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Definition
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| At which price would the firm be earning only a normal profit |
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Definition
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| Economies of scale account for |
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Definition
| Falling long-run average cost (LRAC) |
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Term
| "minimum efficient scale of plant": refers to: |
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Definition
| the scale of plant at which long-run average cost stops declining |
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| Along the rising portion of LRAC |
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Definition
| Larger plant sizes result in higher ATC |
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| Larger size sperations always result in lower per unit cost: T or F |
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Definition
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