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Price rises by 10%, sales fall from 200 to 160. PED =

Markets allocate scarce resources efficiently because

Microeconomics 1

10 terms·StudBud Administration·27 plays

Test your basic market theory (including elasticity)

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Questions 10

Answers

1
Markets allocate scarce resources efficiently because
government agencies control prices
people respond to price signalling over or underproduction
the illuminati run them
there are no market failures
2
Price rises by 10%, sales fall from 200 to 160. PED =
-0.5
-4
-2
-0.25
3
A market sees a price rise and a fall in level of sales
Demand shifted right
Supply shifted right
Demand shifted left
Supply shifted left
4
Good A is an inferior good and is a close substitute to Good B
YED = -2, XED(B) = 1
YED = 2, XED(B) = -1
YED = 2, XED(B) = 1
YED = -2, XED(B) = -1
5
Supply is defined as
THe amount firms will sell
THe quantity firms are willing to offer at a given price
the equilibrium quantity sold
the number consumers will sell at a price
6
The price of oil falls. What happens to natural gas?
Demand shifts right
Supply shifts left
Supply shifts right
Demand shifts left
7
Global economic growth rises and the price of steel rises
Demand shifts right, supply right
Demand shifts left, supply left
Demand shifts right, supply left
Demand shifts left, supply right
8
A good might be price inelastic because it
is in a very competitive market
has no close substitutes
is a luxury
takes up a low proportion of income
9
A normal good has
XED>0
YED>0
MPC>0
PED>0
10
After a bad harvest, a rise in price causes consumers to contract their demand. This shows the
consumption function
rationing function of price
incentive function of price
the utility function