Suppose at $10 the quanity demanded is 100. When the price falls to $8, the quanitty demanded increases to 130. The price elasticity of demand between $10 and $8, by the midpoint method is approximately:1.17Reference: Ref 6-2
(Table: Price Elasticity) Look at the table Price Elasticity. What is the price elasticity of demand (using the midpoint formula) between $2.50 and $2.25?19The income elasticity of demand for eggs has been estimated to be 057. If income grows by 5% in a period, all other things unchanged, demand willincrease by about 2.9%The percentage change in quantity demanded of one good or service divided by the percentage chang ein the price of a related good or service is the __ of demandPrice elasticityThe price elasticity of demand for gasoline in the short run has been estimated to be 0.4. If a war in the Middle East causes the price of oil to increase, how will that affect total revenue from gasoline in the short run, all other things unchanged?Quantity demanded will decrease; total revenue will riseThe price of gasoline rised 5% and the quantity of gasoline purchased falls 1%. The price elasticity of demand is equal to __ and demand is described as0.2; inelasticTotal revenue isthe price of a good times the quantity of the good that is soldUse the midpoint method to calculate the price elasticity of demand eliminates the problem computing:Different elasticities, depending on whether price decreases or increasesWhen the price goes down, the quantity demanded goes up. The price elasticity of demand measuresthe responsiveness of the quantity chang eto the price changeWhen the price of chocolate-covered peanuts decreases from $1.10 to $0.95, the quantity demanded increases from 190 bags to 215 bags. If the price is $1.10, total revenue is __, and if the price is $0.95, total revenue is __$209; $204.25Assume that diminishing marginal utility applies to both coffee and football tickets and that the consumer is spending all of her income. If a consumer purchases a combination of coffee and football tickets such that MUCoffee / PCoffee = 20 and MUFootball tickets / PFootball tickets = 10, to maximize utility, the consumer should buy _____ coffee and _____ football tickets.more; fewer(Figure: Budget Lines for Oranges and Apples) Look at the figure Budget Lines for Oranges and Apples. For some time, Antonio has had $5 per month to spend on oranges and apples. The price of an orange is $0.50 and the price of an apple is $0.25. Which of the charts shows what will happen to his budget line if his income increases to $6?A(Table: Consumer Equilibrium) Look at the table Consumer Equilibrium. Assume that the price of both goods is $1 per unit, that you consume three units of good X and three units of good Y, and that you are spending all of your income. To maximize utility, assuming that the goods are divisible, you would consume _____ of X and _____ of Y.more; lessAfter earning your BA, you have to decide whether to take a job that will pay you $45,000 per year or spend an additional two years earning an MBA. If you decide to pursue the graduate degree, your annual expenses for tuition, books, board, and lodging will be $32,000. You have been offered a scholarship for $10,000 per year, but to pay the remaining $22,000 per year, you would have to cash in savings bonds from your grandparents that have been earning $500 in interest per year. The annual opportunity cost of earning your MBA is:$67,500Economic profit isless than accounting profit if implicit costs exist(Figure: The Marginal Benefit Curve) Look at the figure The Marginal Benefit Curve. The total benefit of mowing six lawns is approximately:$154(Figure: The Marginal Cost Curve) Look at the figure The Marginal Cost Curve. The total cost of mowing four lawns is approximately:$50If the marginal benefit received from consuming a good is les thanthemarginal cost of productionsociety's well-being can be improved if production decreasesProft is the difference between __ and __total revenues';total costs(Table: Marginal Cost of Sweatshirts) Look at the table Marginal Cost of Sweatshirts. The marginal cost of the fifth sweatshirt is:$17(Table: Marginal Cost of Sweatshirts) Look at the table Marginal Cost of Sweatshirts. The marginal cost of producing sweatshirts is an example of ______ marginal costs.increasing(Table: Marginal and Total Benefit) Look at the table Marginal and Total Benefit. Sed is deciding how many football games he wants to attend this year. His marginal benefit from increasing the number of games that he attends from two to three is:30(Table: Marginal and Total Benefit) Look at the table Marginal and Total Benefit. Sed is deciding how many football games he wants to attend this year. If tickets to each football game cost $10, then he should attend _____ game(s).5Rather than put the $100,000 that his grandmother left him in a mutual fund that earns 5% each year, Tommy Wang quit his job, which paid $60,000 per year, and started Wang's Wicker Furniture Store. He rented a showroom for $20,000 for the year, purchased $60,000 in wicker furniture, and incurred costs of $40,000 for sales help and advertising. Instead of using the capital for his own business, he could rent it to a rival firm and earn $5,000 a year. In his first year, his revenue was $150,000.
Reference: Ref 9-1
(Scenario: Accounting and Economic Profit) Look at the scenario Accounting and Economic Profit. The accounting profit of Wang's Wicker Furniture Store is:$30000Scenario: Accounting and Economic ProfitRather than put the $100,000 that his grandmother left him in a mutual fund that earns 5% each year, Tommy Wang quit his job, which paid $60,000 per year, and started Wang's Wicker Furniture Store. He rented a showroom for $20,000 for the year, purchased $60,000 in wicker furniture, and incurred costs of $40,000 for sales help and advertising. Instead of using the capital for his own business, he could rent it to a rival firm and earn $5,000 a year. In his first year, his revenue was $150,000.
Reference: Ref 9-1
(Scenario: Accounting and Economic Profit) Look at the scenario Accounting and Economic Profit. The implicit cost of capital for Wang's Wicker Furniture Store is:5,000the implicit cost of capital isthe opportunity cost of capital used by a businessTo maximize her grade in economics, Stacey should study until;her marginal benefit of studying equals her marginal cost of studyingWhich of the following is a "how much" decision?Tim is trying to decide the amount of money to save each month to buy a new car next yearWhich of the following is an "either-or" decision?Dylan must decide whether to major in economics or financeJacquely is a student at a major state university. Which of the following is NOT an explicit cost of her attending college?the salary taht she could have earned working full-time(Table: Marginal Cost of Sweatshirts) Look at the table Marginal Cost of Sweatshirts. The marginal cost of the second sweatshirt is:$11(Table: Marginal Analysis of Sweatshirt Production I) Look at the table Marginal Analysis of Sweatshirt Production I. The optimal quantity of sweatshirts to produce is:threeAn excise tax that the government collects from the producers of a goodshfits the suppy curve upwardExcise taxes that raise the most revenue and cause the least deadweight loss are likely to be levied on goods for which demand is __ and suppy is __inelastic; inelastic(Figure and Table: The Market for Taxi Rides) Look at the figure and table The Market for Taxi Rides. If the government imposes an excise tax of $1 per ride (causing the supply curve to shift upward by that amount), then the government will collect tax revenues of _____. However, the tax will cause a _____ deadweight loss to society.9 million; 0.5 million(Figure: The Market for Hamburgers) Look at the figure The Market for Hamburgers. If the market is originally in equilibrium and the government imposes an excise tax of $0.80 per unit of the good sold, consumer surplus will be reduced by:$175(Figure: The Market for Productivity Apps) Look at the figure The Market for Productivity Apps. If the government imposes a tax of $1 in this market, consumers will pay _____ more per app and purchase _____ fewer apps.0.5; 5(Figure: The Shrimp Market) Look at the figure The Shrimp Market. If the government wants to limit shrimp sales to 250 pounds, it can impose a _____ excise tax on sellers, and the total tax revenue generated will be _____.$10; $2,500If the government imposes a $5 excise tax on leather shoes and the price of leather shoes increases by $2producers are paying more of the tax than are the consumersSuppose the government levies a $4 per month excise tax on cable TV. if the demadn for cable TV is relatively inelastic and the supply curve is relatively elastic, then the price of cabel TV willincrease by less than $4Tax incidence referes towho really pays the taxThe deadweight loss from an excise tax comes about becausethe number of transactions in the market is reduced and some mutually beneficial transactions do not take place
