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40 terms

Econ Unit 2

STUDY
PLAY
Which of the following would NOT shift the demand curve for beef?

a) a widely publicized study that indicated beef increases one's cholesterol
b) a reduction in the price of cattle feed
c) an effective advertising campaign by pork producers
d) a change in the incomes of beef consumers
B
In 2003 the price of oil increased, which in turn caused the price of natural gas to rise. This can be be explained that oil and natural gas are...

a) complementary good and the higher price for oil increased the demand for natural gas
b) substitute goods and the higher price for oil increased the demand for natural gas
c)complementary goods and the higher price for oil decreased the supply of natural gas
d) substitute goods and the higher price for oil decreased the supply of natural gas
B
A shift to the right in a demand curve for product A can be most reasonably explained by saying that..

a) consumer incomes have declined and they now want to buy less of A at each possible price
b) the price of A increased and as a result consumers want to purchase less of it
c)consumer preferences have changed in favor of A so that they now want to buy more at each possible price
d) the price of A has declined and as a result consumers want to purchase more of it
C
the equilibrium price is when
the number of x demanded and the number of x supplied is equal
if a market is competitive it will move toward the _________
equilibrium
an increase in an automobile workers wages would move the supply curve to the
left
rent control...
serves as an example of a price ceiling
if the minimum wage exceeds the equilibrium wage then
the quantity supplied of labor will exceed the quantity demanded
in a competitive market free of government regulation
price adjusts until quantity demanded equals quantity supplied
to find the amount of tax imposed
find the difference between the supply curves
the price elasticity of demand coefficient measures
buyer responsiveness to price changes
if the price of hand calculators falls from $10 to $9 and as a result the quantity demand increases from 100 to 125 then
demand is elastic
if a firm can sell 3000 units of product A at $10 per unit and 5000 at $8 then
the price elasticity of demand is 2.25
income elasticity of demand measures how sensitive purchases of a specific product are to changes in
income
the cross elasticity between pepsi and coke is
positive, indicating substitute goods
a manufacturer of frozen pizza found that total revenue decreases when price was lowered from $5 to $4. it was also found that the total; revenue decreased when the price was raised from $5 to $6. Thus,
the demand for pizza is elastic above $5 and inelastic below $5
rutgers university raises tuition for the purpose of increasing its revenue so that more faculty can be hired. rutgers is assuming that the demand for education at RU is
relatively inelastic
if demand for product x is inelastic, a 4 percent increase in the price of X
will decrease the quantity of X demanded by less than 4 percent
price increases
quantity demanded decreases
demand increases the demand curve
shifts right
demand decreases the demand curve
shifts left
increase in supply the supply curve
right shift
decrease in supply the curve
left shift
inferior goods
demand increases as incomes decrease
substitute goods
one can be substituted for another
complementary goods
if the price of one goes up and its demand decreases, so will the demand of the other one
the more substitutes of a product the more
elastic it is
inelastic goods
price goes up but there is not a big change in people who will buy it
ex. tobacco
unit elastic
equal change in price and demand
elasticity equation
P change in Q
x
Q change in P
answer to PED is 0
perfectly inelastic
answer to PED is 0-1
inelastic
answer to PED is 1
unitary
answer to PED is 1 to infinity
elastic
answer to PED is infinity
perfect elastic
price floor
legal minimun on the price at which a good can be sold
price ceiling
legal maximum on the price at which a good can be sold
when the price ceiling is above the equilibrium point it
doest affect the market
misallocation of recourses is
anything inefficient
who pays for a tax?
producers and consumers