Microeconomics 201 First Midterm Chapter 1 Introduction: What Is Economics? 1.1 What Is Economics? 1) Which of the following is n o t a factor of production? A) money B) human capital C) physical capital D) labor Answer: A 2) An arrangement that allows buyers and sellers to exchange things is called: A) a contract. B) money. C) efficient. D) a market. Answer: D 3) Economics is best defined as the study of: A) financial decision‑making. B) how consumers make purchasing decisions
Premium
2) Which of the following is most likely to be an inferior good? 4 (TCO 2) The demand curve for a product might shift as the result of a change in 5 (TCO 2) The supply curve shows the relationship between 6 (TCO 2) If the demand for product X is inelastic‚ a 4% increase in the price of X will 7 (TCO 2) If the price of hand calculators falls from $10 to $9 and‚ as a result‚ the quantity demanded increases from 100 to 125‚ then 8 (TCO 2) If quantity demanded is completely unresponsive to price 9 (TCO
Premium Supply and demand Economics
percent change in price is equal to about 50.25%‚ if the new price is $2.99 and the old price was $1.99. In the end‚ if the elasticity of demand is greater than 1 then the demand is elastic. If the elasticity of demand is less than 1 then the demand is inelastic. If the elasticity of demand is equal to 1 then the demand is unitary. 2. The relevance of a price floor and price ceiling is definitely important to Apple. The price floor should be low enough where Apple could break even. This would be at
Premium Supply and demand Elasticity Price elasticity of demand
three types of demand; inelastic demand‚ unit elastic demand‚ or relatively elastic demand. To determine the percentage of change in demand for a product or service the price elasticity equation and coefficient are used. The coefficient Ed is defined as “the percentage change in quantity demanded of product divided by the percentage change in price of product X” (McConnell‚ Brue‚ Flynn‚ 2012‚ pg. 76) The three expressions of Ed are Elastic‚ Inelastic‚ and Unit Elasticity. Elastic demand occurs “if a
Premium Price elasticity of demand Supply and demand Elasticity
majority of goods and services‚ however‚ economists often refer to price elasticity of demand as a positive value (i.e.‚ in absolute value terms). Here is a graph‚ showing all the possible outcomes of PED according to elastic‚ inelastic‚ perfectly elastic‚ perfectly inelastic and unitary. As the difference between the two prices or quantities increases‚ the accuracy of the PED given by the formula decreases for a combination of two reasons. First‚ the PED for a product is not necessarily always constant
Premium Supply and demand Consumer theory Price elasticity of demand
1. Question : (TCO A) There is a decrease in the cost of labor for producing bicycles. (4 pts.) What happens to bicycle supply? (6 pts.) What happens to bicycle demand? Student Answer: When there is an increase in the price of labor for making bicycles the supply would decrease because it would cost more to make the bikes and the supply curve would shift to the left. There would be no change in the demand for the bicycles. Instructor Explanation: Since a change in costs to produce the
Premium Supply and demand Price elasticity of demand
Written Assignment 1 Answer all of the following questions. Title your assignment "Written Assignment 1‚" unless your mentor directs otherwise. This assignment covers text chapters 1 through 6. 1. Define scarcity. Provide examples of goods that are not scarce. Answer: Scarcity is when demand exceeds supply. Examples of goods that are not scarce – air and water 2. How does Adam Smith’s concept of the invisible hand explain why markets move toward equilibrium? Do market participants need to know
Premium Supply and demand
elasticity of supply . c. a shift in the demand curve. d. a decrease in revenue. 2.___A___If an increase in the price of a good leads to no change in the quantity demanded‚ then the demand for the good is a. perfectly inelastic b. perfectly elastic c. elastic d. unit elastic. 3. ___D___ Figure 3.2 shows the market for milk. According to this diagram what happens to revenue when the price of milk falls from $3.00 to $1.00? a. Revenue falls from $3‚000 to $1‚000 b. Revenue rises from $1
Premium Supply and demand Price elasticity of demand Elasticity
demanded equals the percentage change in price‚ then demand is a. inelastic. b. unit elastic. c. elastic. d. irrelevant. e. undefined. 3. Which of the following statements is correct? a. The demand for New Balance shoes is more elastic than the demand for shoes in general. b. The demand for salt is very elastic. c. The demand for luxuries is less elastic than the demand for necessities. d. The demand for a narrowly defined good is less elastic than the demand for a more broadly defined good. e. The larger
Premium Supply and demand Consumer theory Price elasticity of demand
Chapter 04 Demand 10. The long-run price elasticity of demand for a product is generally _________ the short-run elasticity for the same product. A. lower than B. equal to C. higher than D. not comparable to 11. Assume the demand function for skin care products is given by Q = 1‚000 – 20 P + 5I. If P=$25 and I=$1‚000 currently‚ then: A. skin care products are a normal good. B. the elasticity of demand is equal to 11. C. skin care products are inferior. D. The price is too high
Premium Supply and demand Costs Price elasticity of demand