# Shared Flashcard Set

## Details

ECON151 Exam 2
University of Delaware (Professor Harris)
45
Economics
11/03/2009

Term
 If the price elasticity of demand coefficient has a value of .11 then demand is:
Definition
 Inelastic
Term
 If demand is perfetly inelastic:
Definition
 The demand curve is vertical
Term
 A demand curve that is elastic:
Definition
 Indicates that consumers make relatively large quantity adjustments to a price change
Term
 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:
Definition
 1.25
Term
 In question 4 above, what will happen to total consumer expenditures on AT&T cell phone service as a result of the price decrease:
Definition
 Expenditures will increase
Term
 A perfectly elastic demand curve:
Definition
 None of the above
Term
 If there are few good, close substitues for a good, demand for that good is most likely to be:
Definition
 Inelastic
Term
 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?:
Definition
 Its elastic
Term
 Graph 1 Between the prices of \$24.60 and \$23.40 which demand curve is more elastic
Definition
 D2
Term
 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?:
Definition
 D1
Term
 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?"
Definition
 1.2
Term
 If there are few close substitues for a good, demand tends to be elastic. T or F
Definition
 Flase
Term
 Demand tends to be relatively more inelastic along the lower, right hand protion of a straight line demand curve. T or F
Definition
 True
Term
 The shorter the time period availiable the more ______ demand tends to be
Definition
 Inelastic
Term
 If the quantity suppolied is infinitely responsive to a change in price, supply is:
Definition
 Perfectly elastic
Term
 If the market supply curve is upward sloping but relatively flat, then supply is:
Definition
 elastic
Term
 Graph 2: Which schedule depicts the supply of potatoes with a one year time period
Definition
 K (flat, slightly up and to the right)
Term
 Graph 2: Which schedule most accuratley depicts the demand for all brands of cigarettes in the short run:
Definition
 M (Vertical, Slightly up and to the left)
Term
 Graph 2: Which schedule depicts the supply for peaches in the short run (say within one year):
Definition
 J (Vertical, Slightly up and to the right)
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:
Definition
 A highly elastic market supply curve
Term
 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:
Definition
 0.8
Term
 When the market supply curve is highly inelastic an increase in demand will
Definition
 Cause a small increase in equilibrium quanitity and big increase in price
Term
 Suppose the supply of a good is inelastic. If the market demand decreases total spending on the good will increase. T or F
Definition
 False
Term
 Which of the following has the most inelastic market supply curve:
Definition
 Cardiovascular (heart) surgeons
Term
 Over the long run supply tends to become:
Definition
 More elastic
Term
 Graph 3: A government imposed price floor is best illustrated by a price of:
Definition
 Pc (top horizontal line)
Term
 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:
Definition
 Pc (Top Horizontal line)
Term
 Graph 3: A government price ceiling on interest rates designed to make loanable funds more affordable for low-income individuals would cause:
Definition
 a shortage of Q3-Q1
Term
 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
Definition
 True
Term
 Which of the following is an example of a price ceiling:
Definition
 Gasoline price controls implemented druing the 1970s and 80s
Term
 Economic profit is:
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
Term
 Impicit costs do not incolce or require a direct, money expenditure. T or F
Definition
 True
Term
 The law of diminishing marginal returns states:
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.
Term
 The chinese merchants prover: "where there is no gain the loss is obvious" refers to which economic concept discussed in class
Definition
 a normal profit
Term
 Average total cost (ATC) is at all output levels alawyas below marginal cost (MC). T or F
Definition
 False
Term
 As output increases, the difference between ATC and average variable cost (AVC) increases. T or F
Definition
 False
Term
 If a firm's product selling price is ____ the minimum point of its ATC, the firm would be earning at least a normal profit
Definition
 Above
Term
 Which of the following causes the short-run average toatal cost curve to increase at high levels of output?
Definition
 rapidly rising average variable cost
Term
 Graph 4: The vertical distance between ATC and AVC represents
Definition
 Average fixed cost
Term
 In the short run the firm would receive economic profits if price were:
Definition
 above P2
Term
 At which price would the firm be earning only a normal profit
Definition
 P2
Term
 Economies of scale account for
Definition
 Falling long-run average cost (LRAC)
Term
 "minimum efficient scale of plant": refers to:
Definition
 the scale of plant at which long-run average cost stops declining
Term
 Along the rising portion of LRAC
Definition
 Larger plant sizes result in higher ATC
Term
 Larger size sperations always result in lower per unit cost: T or F
Definition
 False
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