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Get faster at matching terms Terms in this set (31)The bowed shape of the production possibilities frontier can be explained by the fact that the opportunity cost of one good in terms of the other increases as more of that good is produced. Which of the following events would cause both the equilibrium price and equilibrium quantity of number two grade potatoes to increase if number two grade potatoes are an inferior good? a decrease in consumer income When quantity demanded increases at every possible price, the demand curve has shifted to the right. A direct or positive relationship exists between a country's productivity and its standard of living. A production possibilities frontier can shift outward if there is a technological improvement. If the price elasticity of supply is 1.5, and a price increase led to a 3% increase in quantity supplied, then the price increase is about 2.0%. Demand is said to be price elastic if buyers respond substantially to changes in the price of the good. The price elasticity of demand %(change)Qd/ %(change)P measures the responsiveness of the quantity demanded or supplied of a good to a change in its price. Which of the following events must cause equilibrium price to fall? demand decreases and supply increases Suppose the figure shows the market demand for coffee. Suppose the price of tea, a substitute good, increases. Which of the following changes would occur? a shift from D2 to D1 Suppose the income of buyers in a market for an inferior good decreases and a technological advancement occurs also. What would we expect to happen in the market? Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous. Suppose that demand is inelastic within a certain price range. For that price range an increase in price would increase total revenue because the decrease in quantity demanded is proportionately less than the increase in price. normal good As income increases, demand for that good increases. inferior good As income goes up, demand for that good goes down. (Mac n cheese) Ed < 1.0 Inelastic Ed > 1.0 Elastic surplus current price is above its equilibrium price Suppose that demand for a good increases and, at the same time, supply of the of the good stays the same. What would happen in the market for the good? BOTH price and quantity would both increase Price*Quantity = Total Revenue / Total Expenditure true income elasticity percent change in quantity demanded divided by the percent change in income percent change (final - initial) / initial
suppose demand is perfectly elastic, and the supply of the good in question decreases, as a result the equilibrium quantity decreases, and the equilibrium price is unchanged what events cause equilibrium price to rise? demand increases and supply decreases when a supply curve is relatively flat, the supply is relatively elastic economic models are simplifications of reality, and in this respect economic models are no different than other scientific models if the price elasticity of demand for a good is 1.2, then a 5 percent decrease in price results in a 6 percent increase in the quantity demanded the gains from specialization and trade are based not on comparative advantage, but on absolute advantage false ppf are usually bowed outward, this is bc resources are specialized; that is, some are better at producing particular goods rather than other goods the discovery of a new hybrid wheat would increase the supply of wheat. as a result, wheat farmers would realize a decrease in total revenue if demand for wheat is inelastic if the demand for a product increases, then we would expect equilibrium price and equilibrium quantity to both increase when the price of a good or service changes there is movement along a given demand curve Recommended textbook solutions Principles of Microeconomics7th EditionN. Gregory Mankiw 830 solutions Principles of Macroeconomics6th EditionN. Gregory Mankiw 433 solutions Principles of Microeconomics8th EditionN. Gregory Mankiw 796 solutions Essential Foundations of Economics7th EditionMichael Parkin, Robin Bade 232 solutions Sets with similar termsEcon Homework 317 terms Lloyd_Shakespeare Micro Exam Two38 terms Brittany_Torres4 Supply and Demand42 terms Kevin_Bruzon Microeconomics chapter 115 terms Morgandu4 Sets found in the same folderTest 2 practice microeconomics20 terms Bill_Vang quiz ch. 430 terms Savannah_McCleary Chapter 635 terms superhomeworkhelp micro final30 terms mira_nelson Other sets by this creatorP Exam13 terms mira_nelson macro final51 terms mira_nelson psy 235 final53 terms mira_nelson psy 235103 terms mira_nelson Verified questionsECONOMICS What is productivity's relationship to market growth? Verified answer
ECONOMICS Diminishing marginal returns always involve A. too much plant capacity. B. a rapid expansion of plant size. C. a slow expansion of plant size. D. a fixed input. E. inputs that are all variable. Verified answer ECONOMICS Firms organizing production in large, centrally powered factories did all of the following except a. promote a more efficient division of labor. b. reduce transportation costs. c. reduce consumer reliance on trade. d. enable the use of specialized machines. Verified answer
ECONOMICS In any city at any time, some of the stock of usable office space is vacant. This vacant office space is unemployed capital. How would you explain this phenomenon? In particular, which approach to explaining unemployed labor applies best to unemployed capital? Do you think unemployed capital is a social problem? Explain your answer. Verified answer Other Quizlet setsClassifications and Sources of Law46 terms hannahwhitesell Health EDU Exam Study Guide!!!32 terms BRIA_LAWRENCE13 Impact of dentistry - HHD 1 / Exam 144 terms g30ryan exam#361 terms rhi3491 Related questionsQUESTION An output combination that cannot be achieved with the resources available to the producer and a given technology is represented by: 5 answers QUESTION .... If the price of pizza increases.... 6 answers QUESTION firms may use different objectives simultaneously by its choice of the pricing system 3 answers QUESTION A ranking of all possible consumption bundles in order of preference is known as? 2 answers Which of the following would cause both the equilibrium price and equilibrium quantity of potatoes assume that potatoes are an inferior good to decrease?Which of the following would cause both the equilibrium price and equilibrium quantity of potatoes (assume that potatoes are an inferior good) to decrease? A decrease in supply causes equilibrium price to rise; the increase in price then results in a decrease in demand.
Which of the following would cause both the equilibrium price and the equilibrium quantity to decrease?A decrease in demand will cause the equilibrium price to fall; quantity supplied will decrease. An increase in supply, all other things unchanged, will cause the equilibrium price to fall; quantity demanded will increase.
What can cause both equilibrium price and quantity to increase?An increase in demand will cause an increase in the equilibrium price and quantity of a good. 1. The increase in demand causes excess demand to develop at the initial price.
What would happen to the equilibrium price and quantity of potatoes?What will happen to the equilibrium quantity and equilibrium price of potatoes if population decreases and a new type of potato fungus wipes out 30% of the potato harvest? Equilibrium quantity will decrease and equilibrium price may increase or decrease.
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Which of the following events would cause both the equilibrium price and equilibrium quantity of potatoes assumed as an inferior good to increase?
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