ECON HW Practice Flashcards
Out of the following events, select the one likely to cause an outward shift in the demand curve for coffee:
An increase in the price of tea
The surgeon general’s announcement that drinking coffee lowers the risk of cancer
Heavy rains causing a record-low coffee harvest in South America
An increase in the price of doughnuts
The surgeon general’s announcement that drinking coffee lowers the risk of cancer
Consumer surplus is equal to the difference between…
The minimum price a seller is willing to accept and the market price
The minimum price a buyer is willing to pay and the market price
The maximum price a seller is willing to accept and the market price
The maximum price a buyer is willing to pay and the market price
The maximum price a buyer is willing to pay and the market price
Consumer surplus is shown graphically as the area…
Under the demand curve and below the market price
Under the demand curve and above the market price
Above the supply curve and below the market price
Above the supply curve and above the market price
Under the demand curve and above the market price
Consider the demand for broadband internet service, given as QD = 224 − 4P. Q is the number of subscribers in a given area (in hundreds), and P is the price in dollars per month. This demand relationship is illustrated in the diagram below. Assume the price of broadband service is $25 per month.
What will the total number of subscribers be at a price of $25? Make sure you account for the demand equation representing hundreds of customers when entering your answer—if the demand curve intersects the Q-axis at 224, that’s really 22,400 customers.
12400
Consider the demand for broadband internet service, given as QD = 224 − 4P. Q is the number of subscribers in a given area (in hundreds), and P is the price in dollars per month. This demand relationship is illustrated in the diagram below. Assume the price of broadband service is $25 per month.
What is the total amount paid by broadband subscribers for the service (i.e., Area B), in total dollars per month?
310,000
Consider the demand for broadband internet service, given as QD = 224 − 4P. Q is the number of subscribers in a given area (in hundreds), and P is the price in dollars per month. This demand relationship is illustrated in the diagram below. Assume the price of broadband service is $25 per month.
What is the consumer surplus received by the subscribers (i.e., Area A)?
192,200
Consider the demand for broadband internet service, given as QD = 224 − 4P. Q is the number of subscribers in a given area (in hundreds), and P is the price in dollars per month. This demand relationship is illustrated in the diagram below. Assume the price of broadband service is $25 per month.
What is the total value to subscribers of broadband service (i.e., Areas A & B)?
502,200
In 1997, Sony introduced the DVD player, replacing the VHS videotape and shepherding in a new era of high definition movie viewing. Soon, there were over 100 different player models competing. DVD became the standard, preferred way to watch movies at home; VHS movies became increasingly difficult to rent or purchase. Then, in 2010, Netflix introduced the streaming of videos, which allowed users to watch movies on their televisions or mobile devices.
Why was the consumer surplus gained by those purchasing DVD players likely quite high between 1997 and 2010?
Because DVD buyers valued the product at much more than the price they paid
Because DVD producers were receiving less than the cost of production
Because DVD buyers valued the product at much less than the price they paid
Because DVD producers were receiving more than the cost of production
Because DVD buyers valued the product at much more than the price they paid
In 1997, Sony introduced the DVD player, replacing the VHS videotape and shepherding in a new era of high definition movie viewing. Soon, there were over 100 different player models competing. DVD became the standard, preferred way to watch movies at home; VHS movies became increasingly difficult to rent or purchase. Then, in 2010, Netflix introduced the streaming of videos, which allowed users to watch movies on their televisions or mobile devices.
Did the introduction of streaming video alter the consumer surplus received by purchasers of DVD players after 2010?
Yes, because the introduction of streaming video affected the production costs of DVDs
No, because the introduction of streaming video did not affect the production costs of DVDs
Yes, because the introduction of streaming video affected the price that DVD buyers were willing to pay
No, because the introduction of streaming video did not affect the price that DVD buyers were willing to pay
Yes, because the introduction of streaming video affected the price that DVD buyers were willing to pay
Would the following shift the demand curve or cause a movement along the demand curve? Out-N-In, a burger joint with an absurd national following in the US, sells more burgers as the price of chicken rises.
shift the demand curve
Would the following shift the demand curve or cause a movement along the demand curve? Nettoyer raises the price for its laundry detergent, which results in less sales and strange scents around college dorm floors.
Movement along the demand curve
Which of the choices illustrates the law of demand?
Tyler wants to buy more candy bars at $1 than at $2
Tyler wants to buy more candy bars at $2 than at $1
Tyler offers more candy bars for sale at $2 than at $1
None of the choices are correct
Tyler wants to buy more candy bars at $1 than at $2
When the price of hair gel changes by 28%, the quantity demanded of hair gel changes by 11.2%. Calculate the price elasticity of demand for hair gel. Round the answer to the nearest tenth.
-0.4
When the price of hair gel changes by 28%, the quantity demanded of hair gel changes by 11.2%. Is the demand for hair gel elastic, inelastic, or unit elastic?
inelastic
Which statement is the best definition of the own-price elasticity of demand?
The absolute value of the slope of the demand curve
The ratio of the percent change in demand to the percent change in income
The ratio of the percent change in quantity demanded to the percent change in price
The ratio of the percent change in price to the percent change in quantity demanded
The ratio of the percent change in quantity demanded to the percent change in price
You are the product manager of Tide at Procter & Gamble. The company is considering a 15% price increase, and the CMO asks you to tell her how the quantity demanded will change as a result. You know that the price elasticity for Tide is -2.5. You tell the CMO that the quantity demanded will change by…
-37.5%
The law of supply explains…
The negative relationship between price and quantity demanded
The negative relationship between price and quantity supplied
The positive relationship between price and quantity demanded
The positive relationship between price and quantity supplied
The positive relationship between price and quantity supplied
If the price elasticity of supply for aluminum is 0.11, then price elasticity of supply for aluminum is…
Perfectly inelastic
Relatively inelastic
Relatively elastic
Perfectly elastic
Relatively inelastic
The annual demand for full-spectrum LED light bulbs in Fairbanks, Alaska, is estimated to be QD = 20,000 − 1,000P. The supply is estimated to be QS = −12,000 + 3,000P. What is the equilibrium price of full spectrum LED light bulbs?
8
The annual demand for full-spectrum LED light bulbs in Fairbanks, Alaska, is estimated to be QD = 20,000 − 1,000P. The supply is estimated to be QS = −12,000 + 3,000P What is the equilibrium quantity of full spectrum LED light bulbs?
12,000
The annual demand for full-spectrum LED light bulbs in Fairbanks, Alaska, is estimated to be QD = 20,000 − 1,000P. The supply is estimated to be QS = −12,000 + 3,000P. What is consumer surplus?
72,000
The annual demand for full-spectrum LED light bulbs in Fairbanks, Alaska, is estimated to be QD = 20,000 − 1,000P. The supply is estimated to be QS = −12,000 + 3,000P. What is producer surplus?
24,000
Three students have different demands for doughnuts. André’s demand is given by QA = 5 - P; Brenda’s demand is given by QB = 6 - 2P; and Cooper’s demand is given by QC = 4 - 0.5P. What is the market demand curve for doughnuts in the price range where all three are buying doughnuts?
Q = 15 - 3.5P
- Assume the demand for pizza delivery is given by QD = 800 – 32P, where QD measures the number of pizzas demanded each week. What is the associated marginal revenue function for this demand curve?
MR = 25 – (1/16)Q
Assume the demand for pizza delivery is given by QD = 800 – 32P, where QD measures the number of pizzas demanded each week. The marginal revenue at a quantity of 96 is equal to…
19
Assume the demand for pizza delivery is given by QD = 800 – 32P, where QD measures the number of pizzas demanded each week. The marginal revenue at a quantity of 480 is equal to…
-5
Different prices to different customers for the same good
price discrimination
- A business mentions the following on their Web page: “A military discount is available at our site during regular summer operating schedule off of the Regular, Junior and Senior One Day admission. This discount is available to active duty military, reserves, retired military personnel, and members of the National Guard.” This is ______ price discrimination.
third degree
- Kip’s Auto Detailing has two locations in two distant neighborhoods, Uptown and Downtown. Uptown customers’ demand is given by QUT = 1000 – 10P, where Q is the number of cards detailed per month; Downtown customers’ demand is QDT = 1600 – 20P. How many customers will be served in the Uptown location to maximize revenue if Kip prices uniformly in both markets?
566.67
- Kip’s Auto Detailing has two locations in two distant neighborhoods, Uptown and Downtown. Uptown customers’ demand is given by QUT = 1000 – 10P, where Q is the number of cards detailed per month; Downtown customers’ demand is QDT = 1600 – 20P. How many customers will be served in the Downtown location to maximize revenue if Kip prices uniformly in both markets?
733.33
- Kip’s Auto Detailing has two locations in two distant neighborhoods, Uptown and Downtown. Uptown customers’ demand is given by QUT = 1000 – 10P, where Q is the number of cards detailed per month; Downtown customers’ demand is QDT = 1600 – 20P. What is the price that maximized Kip’s revenue if he prices uniformly in both markets?
43.33
Kip’s Auto Detailing has two locations in two distant neighborhoods, Uptown and Downtown. Uptown customers’ demand is given by QUT = 1000 – 10P, where Q is the number of cards detailed per month; Downtown customers’ demand is QDT = 1600 – 20P. What is Kip’s revenue if he prices uniformly in both markets?
56,333
Refer to questions 6 – 10. Let’s now say Kip decides to charge different prices at each location. What price should he charge at the Uptown location?
50
Refer to questions 6 – 10. Let’s now say Kip decides to charge different prices at each location. What price should he charge at the Downtown location?
40
What is Kip’s total revenue if he price discriminates across both locations?
57,000
There are two types of Netflix users: intensive users and casual users. Intensive users account for 20% of all viewers and have inverse demand: Pi = 0.6 – 0.01Qi and casual users account for 80% of all viewers and have inverse demand of Pc = 0.4 – 0.02Qc. You are tasked with choosing the optimal monthly membership fee to maximize revenue. Netflix remains committed to allowing unlimited streaming once this fee has been paid (You can assume Netflix can provide an hour of streaming at essentially $0 cost). How many hours will intensive users stream after they pay their membership fee?
60
There are two types of Netflix users: intensive users and casual users. Intensive users account for 20% of all viewers and have inverse demand: Pi = 0.6 – 0.01Qi and casual users account for 80% of all viewers and have inverse demand of Pc = 0.4 – 0.02Qc. You are tasked with choosing the optimal monthly membership fee to maximize revenue. Netflix remains committed to allowing unlimited streaming once this fee has been paid (You can assume Netflix can provide an hour of streaming at essentially $0 cost). How much consumer surplus will intensive users receive?
18
There are two types of Netflix users: intensive users and casual users. Intensive users account for 20% of all viewers and have inverse demand: Pi = 0.6 – 0.01Qi and casual users account for 80% of all viewers and have inverse demand of Pc = 0.4 – 0.02Qc. You are tasked with choosing the optimal monthly membership fee to maximize revenue. Netflix remains committed to allowing unlimited streaming once this fee has been paid (You can assume Netflix can provide an hour of streaming at essentially $0 cost). How many hours will casual users stream after they pay their membership fee?
20
There are two types of Netflix users: intensive users and casual users. Intensive users account for 20% of all viewers and have inverse demand: Pi = 0.6 – 0.01Qi and casual users account for 80% of all viewers and have inverse demand of Pc = 0.4 – 0.02Qc. You are tasked with choosing the optimal monthly membership fee to maximize revenue. Netflix remains committed to allowing unlimited streaming once this fee has been paid (You can assume Netflix can provide an hour of streaming at essentially $0 cost). How much consumer surplus will casual users receive?
4
There are two types of Netflix users: intensive users and casual users. Intensive users account for 20% of all viewers and have inverse demand: Pi = 0.6 – 0.01Qi and casual users account for 80% of all viewers and have inverse demand of Pc = 0.4 – 0.02Qc. You are tasked with choosing the optimal monthly membership fee to maximize revenue. Netflix remains committed to allowing unlimited streaming once this fee has been paid (You can assume Netflix can provide an hour of streaming at essentially $0 cost). What fee will you charge?
4 not sure on this yet
18 * 0.2 = 3.6
4 * 1 = 4
This is why you would set the fee at 4 because you could capture more revenue
Which of the following is true concerning the elasticity of supply in the short run and in the long run?
Supply is less elastic in the short run and more elastic in the long run because producers have more flexibility in the long run and more time for the adjustment of processes
A bakery has a marginal product of labor of 7 and an average product of labor of 12. If this bakery hires one more worker, would the average product increase or decrease?
decrease why
MPL>APL, APL will go up
MPL<APL, APL will go down
A bakery has a marginal product of labor of -12. Does this mean the average product is also negative?
no why
