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Suppose that college tuition is higher this year than last year and that more students are enrolled in college this year than last year. Based on this information, we can best conclude that

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despite the increase in price, quantity demanded rose due to some other factor changing

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If the price of movies on VHS rises while the price of movies on DVD remains the same, the law of demand predicts that consumers will

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substitue movies on DVD for movies on VHS

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Tuition and fees for four year colleges in the United States have risen by an average of 5.9 percent in 2006. One cause for the increase in price has been an increase in emand for college education. In the standard model, what could be a possible explanation for the increase in the demand for college education

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Income in the US has risen

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Suppose farmers can use their land to grow either wheat or corn. The law of supply predicts that an increase in the market price of wheat will cause

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farmers to substitute wheat for the production of corn

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Suppose when you are offered 5 dollars an hour to work in the capus library, you choose not to work, but when you are offered 8 dollars an hour you accept a part-time position. Your behavior can best be explained by the fact that your supply of labor curve is

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down-ward sloping

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the distinction between supply and the quantity supplied is best made by saying that

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supply is represented graphically by a curve and quantity supplied as a point in that curve

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In 2004 Argentina imposed a 20 percent tax on natural gas exports to be paid by suppliers

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supply of natural gas exports to shift to the left

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which would be expected to cause an increase in the supply of fax machines

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a decrease in the cost of manufacturing fax machines

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the more the current price exceeds the equilibrium price the

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greater the resulting surplus will be

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when the wage rate paid to labor is above equilibrium the

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number of workers seeking jobs exceed the number of jobs available

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if the price in market is above its equilibrium level, there will be a

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surplus and downward pressure on price

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if supply and demand intersect at a price of 5$ then a reduction in price from 6$ to 5$ will cause an increase in quantity

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demanded a decrease in quantity supplied and the alleviation of a surplus

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The firm is producing an output of 24 and has total costs of 260 its marginal cost

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cannot be determined

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the difference between the short run and the long run in the cost model is that

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in the short run at least one input factor of production is fixed in the long run all inputs are variable

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if marginal cost is less than average variable cost then average variable cost will

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decrease as output rises

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the marginal cost curve intersects the

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average variable cost curve at its minimum point

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the marginal cost curve intersects the average goal cost when average variable costs are

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rising

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the average variable cost curve is a mirror image of the

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average product curve

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at the very high levels of output, total cost tends to

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increase at an increasing rate

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the total satisfaction one gets from one's consumption of product is called

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total utility

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When marginal utility is zero total utility is

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at its maximum

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If the total utility curve is a straight line, the marginal utility curve would be a

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flat line with a slope of zero

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you're maximizing utility when

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(MU of X)/(P of X) = (MU of Y)/(P of Y)

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The absolute value slope of the indifference curve given the law of diminishing marginal rate of substitution

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declines as one moves to the right

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If the price of machinery increase, the isocost line will rotate

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in and become flatter

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An isoquant is a curve that represents combinations of

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factors of production that produce equal amounts of output

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Isoquants slope down because

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as less of one input is used, more of another must be used if output is to remain constant

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the marginal rate of substituion is the rate at which

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inputs must be substituted for one another in order to keep output constant

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an isocost line is a line that represents combinations of

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factors of production that cost the same amount

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If the law of diminishing marginal productivity holds true, then eventually both the marginal cost curve and the average cost curve must begin to be

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upward sloping

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the minimum point of the average variable cost curve is reached at the output level at which

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average product is maximized

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other things equal when the average productivity falls

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average variable cost must rise

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marginal cost curve should go through

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the minimum points of the AVC and ATC curves

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the average fixed cost curve appears

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always downward sloping

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Effective rent controls

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cause the quantity of rental occupied housing demanded to exceed the quantity supplied

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If the demand for agricultural output is highly inelastic, an improvement in the technology used int eh agricultural industry will most likely cause a

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large drop in the price of agricultural output combined with a small increase in quantity

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If supply is highly elastic demand shifts to the right

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price will hardly change at all; quantity will rise significantly

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for complements

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cross price elasticity of demand is negative

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If macaroni and cheese is an inferior good then falling incomes will tend to

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put upward pressure on its price and quantity

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If the supply curve is perfectly elastic the burden of tax on suppliers is borne

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entirely by the consumers

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If demand is perfectly inelastic, the burden of a tax on suppliers is borne

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entirely by the consumers

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The distance between the demand curve and the price the consumer has to pay for a product given quantity demanded is referred to as

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consumer surplus

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a per unti tax on coffee paid by the seller causes the

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supply of coffeee curve to shift upward by the amount of the per unit tax

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when supply is inelastic consumers face

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significant price increases when demand increases

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If elasticity of demand is greater than one

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a rise in price lowers total revenue

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When workers are paid higher wages production costs

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rise, supply shifts leftward and product prices rise

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if the price of air conditioners falls there will be

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an increase in the quantity demanded of air conditioners

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compared to last year fewer oranges are being purchased and the selling price has decreased. this could have been caused by

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a decrease in demand

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the supply of leather jackets would be expected to increase as a result of

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a decrease in the cost of producing leather jackets

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Which is not one of the three central coordination problems of the economy given in the book

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whether

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the marginal benefit from consuming another unit of a good

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equals the increase in total benefits from consuming the unit

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When your wages rise the

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opportunity cost of an hour of leisure increases

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Which cannot be determined using a production possibility table

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what combination of outputs is best

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because you can get more of one good by giving up some of another good the shape of a production possibility curve is

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downward sloping

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to graphically demonstrate the principle of increasing marginal opportunity cost the production possibility curve must be

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bowed out

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countries gain from trade by producing

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the goods they can produce at the lowest opportunity cost

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two countries that specialize their production along the line of comparative advantage and the trade with one another will be able to

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both produce and consume more

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An increase in demand for a good is most likely to cause

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movement down along the supply curve as price changes

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If demadn and supply both increase this will cause

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an increase in equilibrium quantity, but an uncertain effect on the equilibrium price

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An increase in quantity and an indeterminate change in price are consistent with a

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rightward shift in supply and demand

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an effective price ceiling is best defined as a price

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imposed by gov't below equilibrium price

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When an effective price ceiling is removed we would expect the price of the good to

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increase and the quantity demanded to decrease

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Price elasticity of demand is the

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percentage change in quantity of a good divided by the percentage change in the price of that good

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demand is said to be elastic when the

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percentage change in quantity demanded is greater than the percentage change in price

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If quantity demanded changes infinitely when the price changes the demadn

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is perfectly elastic

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along a straight line demand curve total revenue is the highest when elasticity of demand is

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one

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cross-price elasticity of demand is defined as the

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percentage change in demand divided by the percentage change in the price of another good

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for necessities income elasticity is any value

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between 0 and1

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for substitutes

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cross price elasticity of demand can be any positive value

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If there were decreasing marginal opportunity costs the production possibility curve would be

answer

bowed in

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