ECON 2000 Chapter : Chapter 3

9 views2 pages

azuremammoth471

15 Mar 2019

School

Department

Course

Professor

For unlimited access to Textbook Notes, a Class+ subscription is required.

Document Summary

Four different groups participate: domestic consumers, business firms, government foreigners, two market. Factor market: product market, dollars flow- opposite direction from circular flow. Supply and demand: ceteris paribus- assumption that everything else is kept unchanged, demand- buyers produce goods and services. The ability and willingness to buy specific quantities of goods at alternative prices in a given period, ceteris paribus. Supply- the ability and the willingness to sell specific quantities of a good at alternative prices in a given period, ceteris paribus: demand. Individual demand: demand schedule, demand curve- a curve describing the quantities of a good consumer is willing and able to buy at alternative prices in a given period, ceteris paribus. Law of demand- the quantities of a good demanded in a given period increases as its price falls, ceteris paribus: determinants of demand. Income (normal good, inferior good: others goods (substitute goods; complementary goods, expectations, number of buyers.

Related Questions

The following table shows the market demand schedule and supply schedule for notebooks.

Price ($/unit)	Quantity Demanded (units)	Quantity Supplied (units)
1	20	4
2	16	6
3	14	10
4	12	12
5	10	14
6	7	17
7	4	20
8	2	22
9	1	25

Refer to the table above. Assume that the market for notebooks is in equilibrium.

1. Which of the following is likely to happen if there is an increase in the school enrollment rate, everything else remaining unchanged?

A. Both the equilibrium price and quantity of notebooks decrease.

B. The equilibrium price and quantity remain unchanged.

C. Both the equilibrium price and quantity of notebooks increase.

D. The equilibrium price increases, but the equilibrium quantity of notebooks decreases.

2. A shortage occurs in a market when:

A.price is lower than the equilibrium price.

B. price is higher than the equilibrium price.

C. supply exceeds demand.

D. the marginal utility of consumption is negligible.

3. A change in the quantity demanded of a good is:

A. the outcome of a change in income.

B. the outcome of a change in tastes and preferences.

C. represented by a shift to a new demand curve.

D. represented by a movement along the demand curve.

4. The following table shows the demand schedules of three consumers of wine. Assume that these three buyers constitute the entire market.

PRICE ($/Bottle)	Sandra's Demand (Bottles)	David's Demand (Bottles)	Mary's Demand (Bottles)
â$8	2		10
â$6	14	15	18
â$4		23	24
â$2	24	27	28

Refer to the table above. If the market price of wine is $8/bottle, and the market demand for wine is 19 bottles, David's consumption of wine is:

A. 12 bottles.

B. 9 bottles.

C. 4 bottles.

D. 7 bottles.

5. Which of the following factors will NOT cause a shift in the demand for a good?

A. A change in the number of consumers

B. A change in the market price of the good

C. A change in tastes and preferences

D. A change in consumer incomes

6. Are all markets perfectly competitive?

A. No, there are other market types where firms have considerable power to control the price.

B. Yes, any economic system with a market structure is by definition perfectly competitive.

C. No, there are also command and control markets that are run by a central government.

D. No, in other types of markets, sellers offer identical goods and simply accept the market price.

7. Assume that a seller in a perfectly competitive market charges more than the equilibrium price. It is likely that this seller will:

A. increase his profit.

B. lose only a few buyers.

C. increase his sales.

D. lose almost all of his buyers.

8. The willingness to pay for a commodity:

A. increases as the consumption of the commodity increases.

B. is always less than the market price of the commodity.

C. decreases as the consumption of the commodity increases.

D. is always greater than the market price of the commodity.

9. Which of the following is likely to lead to a right shift in the supply curve of cotton?

A. An increase in labor productivity due to training programs

B. A rise in labor costs due to wage demands by labor unions

C. An increase in the price of cotton

D. A decrease in the price of cotton

10. The buyers of a good will want to purchase it as long as their willingness to pay for the good is:

A. equal to zero.

B. greater than or equal to the price.

C. greater than zero.

D. less than the price.

redmammoth450

in Iceland, demand and supply for television use (pay per view) by choice is described by the following demand and supply functions (v represents price per item)

Demand = 198 - 2v

Supply = -2 + 2v

The world market price for TV use is ISK 30. Price per item.

a) Calculate and draw a balance on a picture

i) if no foreign trade is allowed and foreign providers are excluded by excluding IP addresses.

(ii) if 14% VAT is levied on domestic broadcasters and foreign trade is prohibited. The tax is collected by consumers (no collection costs). What is the welfare loss from the tax? Show a picture.

iii) how is the tax burden divided into point ii) and what are its explanations?

b) Domestic tech nerds have avoided technical barriers to using foreign streaming services (VPN gymnastics) and the government does not have the ability to collect VAT on that use and subsequently decide to stop collecting VAT on domestic use: Calculate domestic production, domestic consumption and import. Draw a picture and calculate and benefit from the opening of a business (pretend that there was no VAT for freedom).

c) Due to the pressure of special interest groups of domestic producers, a decision is now made to impose a 30% duty on the world market price of imports (foreign streaming services), but the government has now found that traditional duty can be collected through credit card companies' transactions (no VAT).

i) What will be the price, imports, demand and domestic supply.

ii) How does producer and consumer profit change from point b)?

iii) What will be the macroeconomic loss due to duty compared to free trade without VAT?

chocolateimpala441

1. __________, a term referring to the fact that for many good, as the level of production increases, the average cost of producing each individual unit declines.
a. Economies of scale
b. Specialization
c. Division of labor
d. Skill
2. Which of the following best characterizes the circular flow of income?
a. Household buy factors of production from business, and business buy goods and services from household
b. Business buy resources from the government, and household buy goods and services from business.
c. Businesses buy resources from households, and household use their income from the sale of resources to buy goods and services from businesses
d. The government purchases resources from businesses and households and then sells goods and services to businesses and households.
3. Philosophers draw a distinction between positive statements, which describe the world as it is, and _____________ which describe how the world should be.
a. Opportunity cost
b. Trade-off
c. Normative statement
d. Budget constraint

4. Scarcity implies that:
a. It is impossible to completely fulfill the unlimited human desire for goods and services with the limited resources available
b. Consumers are too poor to afford the goods and services available
c. At the current market price, consumers are willing to purchase more of a good than suppliers are willing to produce.
d. Consumers would be willing to purchase the same quantity of a good at a higher price.
5. The opportunity cost of an action.
a. Can be determined by considering both the benefits that flow from as well as the monetary costs incurred as a result of the action.
b. Can be determined by adding up the bills incurring as a result of the action
c. Can be objectively determined only by economist
d. Is a subjective valuation that can be determined only by the individual who chooses the action.
6.

ochreleopard420

ECON 2000 Chapter : Chapter 3

Document Summary

Get access

Related Documents

ECON 2000 Chapter : Econ Chapter 3

ECON 2000 Chapter : Chapter 3 Book Notes

ECON 2000 Chapter : Chapter 3

Related Questions