The demand for bottled water is elastic. An increase in supply of water would result in

a decrease in price & decrease in TR, a derease in price & increase in TR

In which of the following cases would a firm's total revenue increase?

Price decreases and demand is elastic.

Consumer surplus in a market for a good exists because

some consumers are willing to pay more than equil'um price

If PE(i) of Good X is negative and PE(xy) between X and Y is negative, what must be true of X?

X is an inferior good and a complement for Y

Consumer typically increase the quantity of a good they purchase when the price falls because

the consumers' purchasing power increases

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AP Micro Review Day #2

12 termsStudBud Administration101 plays

Elasticity, Taxes, Welfare Economics, Utility

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Questions 12

Answers

1
When total utility is at its maximum, marginal utility is
negative
increasing
equal to zero
maximum
2
The area representing tax revenue is
P2 P4 X U
P2 U Q3 0
P2 P4 R Z
P1 P3 V T
3
The demand for bottled water is elastic. An increase in supply of water would result in
an excess demand for bottled water
a decrease in price & decrease in TR
an excess supply of bottled water
a derease in price & increase in TR
4
In which of the following cases would a firm's total revenue increase?
Price decreases and demand is inelastic.
Price decreases and demand is inelastic.
Price decreases and demand is elastic.
Price increases and demand is elastic.
5
Consumer surplus in a market for a good exists because
producers do not have power to set their own prices
when the price decrease, most consumers increase demand
some consumers are willing to pay more than equil'um price
binding price floors encourage producers to increase supply
6
"Mu/P (Good x) = MU/P (Good Y)" is the
utility maximization rule
profit maximization rule
law of diminishing marginal returns
cost-minimizing input rule
7
If PE(i) of Good X is negative and PE(xy) between X and Y is negative, what must be true of X?
X is a normal good and a substitute for Y
X is a normal good and a complement for Y
X is an inferior good and a substitute for Y
X is an inferior good and a complement for Y
8
A 10% increase in the price of a good leads to a 25% decrease in quantity demanded. Demand is
perfectly elastic
unit elastic
relatively inelastic
relatively elastic
9
When marginal utility is falling but positive, total utility will
decrease at a decreasing rate
increase at an increasing rate
decrease at an increasing rate
increase at a decreasing rate
10
Consumer typically increase the quantity of a good they purchase when the price falls because
the demand for the good increases
consumers increase their purchase of complementary items
the consumers' purchasing power increases
the marginal utility of the good increases
11
Price of X decreases from $10 to $9, and the quantity demanded goes up from 25 to 30. Demand is
perfectly inelastic
unit elastic
elastic
inelastic
12
The difference between the price CJ is willing to pay for an ice cream vs. the price she pays
ability to pay
marginal utility
consumer surplus
producer surplus

AP Micro Review Day #2 Flashcards | StudBud