When demand for a good is very elastic, revenue ________ when the price falls. | | | | |
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An elasticity measure less than one means that demand is __________. | | | | |
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An elasticity measure greater than one means that demand is __________. | | | | |
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The Latin expression ceteris paribus means | | | | having made all other necessary changes. | | holding constant all other variables. | | assuming all households have similar incomes. | | given the level of income in the economy. | | |
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A variable measured in terms of money is called a ____________________. | | | | real variable | | nominal variable | | macroeconomic variable | | microeconomic variable | | |
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Which of the following is true about the importance of money in economics? | | | | Money is important in both macroeconomics and microeconomics. | | Money is important in macroeconomics but not microeconomics. | | Money is important in microeconomics but not macroeconomics. | | Money is not important in either microeconomics or macroeconomics. | | |
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What is the difference between normative and positive economics? | | | | Positive economics is descriptive and predictive; normative economics is prescriptive. | | Positive economics highlights the positive aspects of the economy; normative economics highlights the average features. | | Positive economics studies the actions of individuals; normative economics studies the actions of households. | | Positive economics is an applied social science; normative economics is a theoretical social science. | | |
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The slope of the demand curve is negative because | | | | the quantity of a good demanded decreases as income declines. | | the quantity of a good demanded increases as income declines. | | the quantity of a good demanded increases as the price declines. | | the quantity of a good demanded decreases as the price declines. | | |
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What is the result of an increase in the price of bread, a normal good? | | | | The demand curve shifts to the right. | | The demand curve shifts to the left. | | The quantity demanded increases. | | The quantity demanded decreases. | | |
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What is the effect on demand for bread when the price of bagels, a substitute for bread, rises? | | | | The demand curve for bread shifts to the right. | | The demand curve for bread shifts to the left. | | The quantity of bread demanded increases. | | The quantity of bread demanded decreases. | | |
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Which of the following would cause the supply curve for bread to shift inward? | | | | An increase in the price of bread | | An increase in the price of bagels | | A decrease in the price of bread | | An increase in the price of flour | | |
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An improvement in technology shifts the supply curve outward because | | | | at every price, firms find producing the good to be more profitable. | | the price of the good increases. | | at every price, firms find producing the good to be less profitable. | | the price of the good decreases. | | |
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Which of the following factors does not affect how much bread a baker is willing to produce? | | | | The price of bread | | The demand for bread | | The cost of inputs | | Technology | | |
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How do expectations of prices affect how much of a good producers are willing to sell? | | | | Expectations of prices affect only demand, not supply. | | Actual prices, not expectations of prices, affect supply. | | If producers expect prices to fall in the future, they supply less at every price. | | If producers expect prices to rise in the future, they supply less at every price. | | |
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When the price of a good is above equilibrium level, | | | | the quantity demanded exceeds the quantity supplied. | | the quantity supplied exceeds the quantity demanded. | | the supply curve shifts to the left. | | the supply curve shifts to the right. | | |
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At a price of P0 in the diagram below, which of the following statements is true?
| | | | Supply equals demand. | | There is excess demand. | | There is excess supply. | | There is scarcity. | | |
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If demand for bread increases at every price, the equilibrium price of bread will | | | | fall. | | rise. | | remain unchanged. | | depend on income. | | |
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If the demand for bread declines, then | | | | at the original equilibrium price, there is excess demand. | | at the original equilibrium price, there is excess supply. | | the supply curve shifts to the right. | | the supply curve shifts to the left. | | |
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Peanut butter and jelly are complementary goods. When the price of peanut butter rises, the demand for jelly ________ and the price of jelly ________. | | | | rises; falls | | rises; rises | | falls; rises | | falls; falls | | |
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The measure of elasticity that economists use is | | | | always a positive number. | | always a negative number. | | positive when demand is elastic and negative when demand is inelastic. | | negative when demand is elastic and positive when demand is inelastic. | | |
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Which of the following formulas is the correct expression for the slope of a line? | | | | |
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Graphically how would an increase in income affect the demand for hamburgers? | | | | The slope of the demand curve would increase. | | The slope of the demand curve would decrease. | | The demand curve would shift outward, parallel to the original demand curve. | | The demand curve would shift inward, parallel to the original demand curve. | | |
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Given the equation P = $6.00 ? $.40Q, where P is the price of the good and Q is the quantity of the good demanded, how many units will this consumer demand if the price is $3.60? | | | | 1.44 units | | 3 units | | 3.6 units | | 6 units | | |
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Which of the following is true about unit elasticity? | | | | Revenues remain unchanged when the price changes. | | Elasticity of demand increases as one moves down the demand curve. | | Elasticity of demand decreases as one moves down the demand curve. | | The elasticity of demand is greater than one at every point along the demand curve. | | |
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Which of the following could be a determinant of the quantity demanded of a good? | | | | The price of the good | | The price of related goods | | Income | | Expectations about the future price of the product | | All of the above | | |
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