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40 Cards in this Set
- Front
- Back
according to the law of demand, the demand curve for a good will |
slope downward |
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An increase in the price of pork will lead to |
a movement up along the demand curve |
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if the price of automobiles were to decrease substantially, the demand curve for gasoline would most likely |
shift rightward |
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an increase in consumer incomes will lead to |
a rightward shift of the demand curve for plasma Tvs |
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when two goods are substitutes in demand, a shock that raises the price of one good causes the price of the other good to |
increase |
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suppose the market demand curve for pizza can be expressed as Q^D=100-2P+3Pb, where Q^D is the quantity of pizza demanded, P is the price of pizza and Pb is the price of a burrito. when the price of burritos is $1.7 what is the demand for pizza? |
Q^D=105.1-2P |
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Suppose the market demand curve for pizza can be expressed as Q^D=100-2P+3Pb where Q^D is the quantity of pizza demanded, P is the price of pizza, and Pb is the price of a burrito. What is the relationship between burritos and pizza from the point of view of consumers? |
They are substitutes |
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Technological innovation in the production of computers reduced production costs and has led to
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a rightward shift of the supply curve for computers
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Suppose the demand curve for a good shifts rightward, causing the equilibrium price to increase. this increase in the price of the good results in |
an increase in quantity supplied |
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The supply curve is influenced by |
the prices of the inputs required to produce the product |
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The market supply curve is found by |
horizontally summing all individual supply curves |
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The price of crude oil dropped to $100 per barrel recently. what would we expect to see happen to the supply of gasoline, which is produced using crude oil? |
The supply of gasoline will increase |
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Once an equilibrium is achieved, it can persist indefinitely because |
in the absence of supply/demand shocks no one applies pressure to change the price |
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Suppose a market were currently at equilibrium. a rightward shift of the demand curve would cause |
an increase in both price and quantity |
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If the demand for high definition televisions increases and the supply of high definition televisions increases, then |
it is clear that quantity sold will increase, the change in the price of televisions is ambiguous |
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from the 1970s through the 1990s the relative price of a college education has increased greatly. during the same time period, college enrollment has also increased. this evidence suggests that during this time period |
the demand curve for a college education has shifted rightward |
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Suppose the market for potatoes can be expressed as follows: supply=Q^S=-20+10p demand:Q^D=220-20p what is the equilibrium price |
8 |
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what is the equilibrium quantity? |
60 |
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The percentage change in the quantity demanded in response to a percentage change in the price is known as the |
price elasticity of demand |
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the change in price that results from a leftward shift of the supply curve will be larger if |
the demand curve is relatively steep than if the demand curve is relatively flat |
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If a consumer increases her quantity of ice cream consumed by 25% when her income rises by 25% then her income elasticity of demand for ice cream is |
1.0 |
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If the demand curve for orange juice is expressed as Q=2000-500p where Q is measured in gallons and p is measured in dollars, then at the price of $2, elasticity equals |
-3 |
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if the demand for orange juice is expressed as Q=2000-500p where Q is measured in gallons and p is measured in dollars, then at the price of $3 the demand curve |
is elastic |
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suppose the demand curve for a good is expressed as Q=50-2p. If the good currently sells for $3 then the price elasticity of demand is |
-2 * (3/44) |
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On a linear demand curve, the higher the price |
the more elastic is demand |
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how will a decrease in price affect a firm's revenues when its product is elastic? |
Revenues will increase |
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A vertical demand curve for a particular good implies that consumers are |
not sensitive to changes in the price of that good |
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if the demand curve for a good is horizontal and the price is positive, then a rightward shift of the supply curve results in |
no change in price |
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the cross price elasticity of demand between two goods will be positive if |
the two goods are substitues |
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In the late 1980s the health benefits of oat bran were widely advertised. if the price of oats increased by 50% causing the quanity of oats supplied to increase by 60% then the price elasticity of supply was |
1.20 |
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a specific tax on sellers will |
shift the supply curve up |
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suppose the demand curve is perfectly inelastic and the supply curve is upward sloping. the price sellers receive after a specific tax is imposed on sellers |
is unchanged |
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For a given positively sloped supply curve, the price increase to consumers resulting from a specific taximposed on sellers will be
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greater the less price elastic demand is.
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Consumers will always pay the entire amount of a specific tax whenever |
supply is perfectly elastic demand is perfectly inelastic |
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suppose the demand curve for a good is downward sloping and the supply curve is upward sloping. at the market equilibrium, if demand is more elastic than supply in absolute value, a $1 specific tax will |
raise the price to consumers by less than 50 cents |
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an indifference curve represents bundles of goods that a consumer |
views as equally desirable |
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Measuring 'y' on the vertical axis and 'x' on the horizontal axis, convex indifference curves implies that the MRS of 'y' for 'x' |
is decreasing as 'x' increases |
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the indifference curves for left shoes and right shoes would most likely be |
L-shaped |
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if two goods are perfect substitutes, then the indiference curves for those two goods would |
downward sloping and straight |
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diminishing marginal rate of substitution can be seen when indifference curves |
become flatter as we move down and to the right |