ECON Test 2 Prep P2
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| Years ago, thousands of country music fans risked their lives by rushing to buy tickets for a Willie Nelson concert at Carnegie Hall. This behavior indicates | the ticket price was below the equilibrium price
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| A decrease in the price of a good will | decrease quantity supplied
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| Which of the following is NOT correct? | The U.S. minimum wage is significantly higher than the minimum wages in France and the United Kingdom
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| You and your college roommate eat three packages of Ramen noodles each week. After graduation last month, both of you were hired at several times your college income. You still enjoy Ramen noodles very much and buy even more, but your roommate plans to bu | be positive, and your roommate's would be negative
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| Music compact discs are normal goods. What will happen to the equilibrium price and quantity of music compact discs if musicians accept lower royalties, compact disc players become cheaper, more firms start producing music compact discs, and music lovers | Quantity will rise, and the effect on price is ambiguous
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| The price paid by buyers in a market will decrease if the government | decreases a binding price floor in that market
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| In a market economy, who or what determines who produces each good and how much is produced? | prices
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| Which of the following expressions represents a cross-price elasticity of demand? | percentage change in quantity demanded of bread divided by the percentage change in price of butter
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| ***Which of the following price changes would result in no change in sellers’ total revenue? TR=PxQ | The price decreases from $24 to $18
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| The price elasticity of supply measures how responsive | sellers are to a change in price
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| The highest form of competition is called | perfect competition
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| In a market economy, supply and demand determine | both the quantity of each good produced and the price at which it is sold
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| What will happen to the equilibrium price and quantity of new cars if the price of gasoline rises, the price of steel rises, public transportation becomes cheaper and more comfortable, and auto-workers negotiate higher wages? | Quantity will fall, and the effect on price is ambiguous
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| At a price of $50 per unit, sellers' total revenue equals | $1250
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| ***Suppose sellers of perfume are required to send $1.00 to the government for every bottle of perfume they sell. Suppose this tax causes the price paid by buyers of perfume to rise by $0.60 per bottle. Which of the following statements is correct? | The effective price received by sellers is $0.40 per bottle less than it was before the tax
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| ***Suppose that the demand for picture frames is highly inelastic, and the supply of picture frames is highly elastic. A tax of $1 per frame levied on picture frames will decrease the effective price received by sellers of picture frames by | less than $0.50
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| ***For the general population, a 10 percent increase in the price of cigarettes leads to a | 4 percent reduction in the quantity demanded of cigarettes
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| Other things equal, when the price of a good falls, the | quantity supplies of the good decreases
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| Refer to Table 4-4. Suppose the market consists of Barb and Carl only. If the price falls by $2, the quantity demanded in the market increases by | 8 units
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| The demand for a good becomes more inelastic | as the market is defined more broadly
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| A decrease in price from $20 to $10 leads to a | decrease in total revenue of $120, so the price elasticity of demand is less than 1 in this price range
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| Income elasticity of demand measures how | the quantity demanded changes as consumer income changes
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| What will happen to the equilibrium price and quantity of traditional camera film if traditional cameras become more expensive, digital cameras become cheaper, the cost of the resources needed to manufacture traditional film falls, and more firms decide t | Price will fall, and the effect on quality is ambiguous
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| Demand is inelastic if the price elasticity of demand is | less than 1
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| The movement from Point A to Point B represents a(n) | decrease in the quantity supplied
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Created by:
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