Problem Set 2 (Chapters 4 & 5) Flashcards
A change in which of the following will NOT shift the demand curve for Coke?
a.the price of Pepsi
b.the price of Coke
c.the income of consumers purchasing Coke
d.the price of snacks purchased along with Coke
B
Suppose that the price of computer chips, an input used in the production of laptops, decreases. According to our analysis of supply and demand, will this increase the demand for laptops?
a.No, not an increase in demand, a decrease in quantity demanded
b.No, not an increase in demand, an increase in quantity demanded
c.Yes, the price of laptops will decrease causing the demand for laptops to increase
d.No, the price of laptops will increase causing the demand for laptops to decrease
B
Suppose that hotdogs and hotdog buns are complements. If the price rises for hotdogs, what effect do we predict in the market for hotdog buns?
a.the equilibrium price of hotdog buns will be lower, the equilibrium quantity of hotdog buns will be higher
b.the equilibrium price of hotdog buns will be lower, the equilibrium quantity of hotdog buns will be lower
c.the equilibrium price of hotdog buns will be higher, the equilibrium quantity of hotdog buns will be higher
d.the equilibrium price of hotdog buns will be higher, the equilibrium quantity of hotdog buns will be lower
B
Suppose that the number of firms in the market selling cookies increases. What effect would we predict in the market for cookies?
Question 4 Select one:
a.an increase in demand
b.a decrease in demand
c.an increase in supply
d.a decrease in supply
C
Which of the following would tend to increase the demand for Food Lion Cola?
a.an decrease in the price of Food Lion Cola
b.a decrease in sugar, an ingredient used to produce Food Lion Cola
c.a decrease in the price of Harris Teeter Cola, a substitute for Food Lion Cola
d.a decrease in the income of consumers purchasing Food Lion Cola, assuming it is an inferior good
D
Suppose that the price of good A increasing causes the demand for good B to increase. What do we know about these goods?
a.these goods are both inferior goods
b.these goods are both normal goods
c.these goods are complements
d.these goods are substitutes
D
Suppose Famous Amos decides to use Godiva brand chocolate chips in their cookies, increasing demand. Assume though that using Godiva brand chocolate chips increases the price to produce Famous Amos cookies. What are the net effects on the equilibrium price and quantity of Famous Amos cookies?
a.an increase in the equilibrium price of cookies, while the effect on the equilibrium quantity of cookies is uncertain
b.a decrease in the equilibrium price of cookies, while the effect on the equilibrium quantity of cookies is uncertain
c.an increase in the equilibrium quantity of cookies, while the effect on the equilibrium price of cookies is uncertain
d.a decrease in the equilibrium quantity of cookies, while the effect on the equilibrium price of cookies is uncertain
A
What is the mechanism which causes efficiency in a free market?
a.the president within that economy deciding on the best price
b.the central bank within that economy deciding on the best price
c.a dictator within that economy deciding the best price
d.a free-flowing price within that economy decided by consumers and firms
D
A 20% decrease in price causes the quantity demanded of a good to increase by 40 percent. The value for the price elasticity of demand is ___________, and demand is ____________.
a.-0.5, elastic
b.-0.5, inelastic
c.-2, inelastic
d.-2, elastic
D
If the value of the price elasticity of supply is greater than 1, supply is ___________. If the elasticity of supply equals zero, supply is __________.
a.elastic, perfectly inelastic
b.elastic, perfectly elastic
c.inelastic, perfectly inelastic
d.inelastic, perfectly elastic
A
If lettuce and olives have a cross elasticity of -3, and the price of lettuce increases by 10%, we would predict
a.olive sales to increase by 30% as the two goods are complements
b.olive sales to decrease by 30% as the two goods are substitutes
c.olive sales to increase by 30% as the two goods are substitutes
d.olive sales to decrease by 30% as the two goods are complements
D
An increase in the supply of a good will increase the total revenue producers receive if
a.demand is inelastic
b.demand is elastic
c.demand is unit elastic
d.demand is perfectly inelastic
B
What do we call a good with an income elasticity that is positive?
a.substitute
b.complement
c.normal
d.inferior
C
If the cross elasticity of demand between pencils and laptops is 0, then the two goods are
a.inferior
b.substitutes
c.unrelated
d.complements
C
The price of a good rises from $8 to $12, and the quantity demanded falls from 110 to 90 units. Calculated with the midpoint method, the price elasticity of demand is
a.- 1/5
b.- 1/2
c.-2
d.-5
B
