Exam Four Flashcards
Assume the price elasticity of demand for bottled water is 0.4. If the price of bottled water increases by 20%, how much would we expect the quantity of bottled water demanded to decrease?
8%
Graph in Economics Quiz Questions
Point D
Graph in Economics Quiz Questions
The new equilibrium will not occur at any of the above four points.
Suppose the demand for gasoline increases AND the supply of gasoline decreases. Which of the following is NOT a possible outcome of these changes in the market for gasoline?
The equilibrium price of gasoline stays the same
Suppose there is a decrease in the supply of lumber. What would we expect to happen to the equilibrium price and quantity of lumber?
“Price will rise, quantity will fall.”
Suppose there is an increase in the supply of cell phones. What would we expect to happen to the equilibrium price and quantity of cell phones?
“Price will fall, quantity will rise.”
Which one of the following will NOT result in a shift in the supply curve for clothing?
The incomes of people purchasing clothes increase
Which one of the following transactions best meets the classical view of a market?
A buyer and a seller reach a price agreement for the sale of a stock on the New York Stock Exchange
A change in demand occurs whenever a demand curve shifts for some reason other than a change in price. (T/F)
True
The price elasticity of supply is calculated as…
the percent change in quantity supplied divided by the percent change in price
A spot market is defined as a market that…
involves the immediate delivery of something
According to the text, a shortage occurs whenever a demand curve shifts but the supply curve stays the same. (T/F)
False
An example of a menu cost would be the cost of paying for optional equipment on a new automobile. (T/F)
False
At the market-clearing equilibrium the quantity demanded equals the quantity supplied. (T/F)
True
If the demand for ice cream increases, we would expect the equilibrium price and quantity of ice cream to increase. (T/F)
True
