ECON 2103 Exam 2 – Flashcards
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Which of the following changes would not shift the demand curve for a good?
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A change in the price of the good or service
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An increase in demand
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Shifts the demand curve to the right
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Which of the following would cause the demand curve to shift to the right in the market for movie theaters in the United States?
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None of the above
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Suppose that the federal government is concerned about drug-related crime in the United States. Congress is considering two policy options. One would focus on INTERDICTION, where government prohibits supply of drugs. The other would focus on educational campaign with the objective of informing the citizenry about the negative consequences of drug addiction. If the educational campaign is successful, we could illustrate the policy as producing a movement from
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Point A to Point B in Panel 1
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Which one of the following demonstrates the law of supply?
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When price of a good increases more units of the good are supplied
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Which of the following would cause the supply curve to shift to the left in the market for Latte?
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An increase in the price of inputs, including milk
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Suppose that demand for a good decreases and, at the same time, supply of the good decreases. What would happen in the market for the good?
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Equilibrium quantity would decrease, but the impact on equalibrium price would be ambigous
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Which combination would produce an increase in equilibrium price and an indeterminate change in equilibrium quantity?
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B
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The current price of neckties is $30, but the equilibrium price of neckties is $25. As a result,
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All of the above are correct:
A. the quantity supplied of neckties exceeds the quantity demanded of neckties at the $30 price.
B. the equilibrium quantity of neckties exceeds the quantity demanded at the $30 price.
C. there is a surplus of neckties at the $30 price.
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The flatter the demand curve through a given point, the
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greater the price elasticity of demand at that point
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Suppose the price of potato chips decreases from $1.45 to $1.25 and, as a result, the quantity of potato chips demanded increases from 2,000 to 2,200. Using the midpoint method, the price elasticity of demand for potato chips in the given price range is
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0.64, and is inelastic
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When the price of good A is $50, the quantity demanded of good A is 500 units. When the price of good A rises to $70, the quantity demanded of good A falls to 400 units. Using the midpoint method, the price elasticity of demand for good A is
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0.67, and an increase in price will result in a in total revenue for good A.
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Mary purchases 10 movie tickets per year when her annual income is $5,000 and 15 movie tickets when her annual income is $6,000. Mary's income elasticity of demand for movie ticket is
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2.2, and basketball tickets are a normal good
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Last month, sellers of good Y took in $100 in total revenue on sales of 50 units of good Y. This month sellers of good Y raised their price and took in $120 in total revenue on sales of 40 units of good Y. At the same time, the price of good X stayed the same, but sales of good X decreased from 40 units to 20 units. We can conclude that goods X and Y are
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complements, and have a cross price -1.67
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If the government removes a $2 tax on buyers of cigars and imposes the same $2 tax on sellers of cigars, then the price paid by buyers will
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Not change, and the price received by sellers will not change
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Suppose the government imposes a 20-cent tax on the sellers of artificially-sweetened beverages. The tax would shift
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Supply, raising the equilibrium price and lowering the equilibrium quantity in the market for artificially sweetened beverages
