AP Microeconomics Flashcard

Front

Assume that demand for bottled water is relatively price elastic. An increase in supply of bottled water will result in which of the following? A decrease in price, leading to an increase in total revenue, A decrease in price, leading to a decrease in total revenue, An excess supply of bottled water, An excess demand for bottled water, A relatively small decrease in price and no change in equilibrium quantity

Back

A decrease in price, leading to an increase in total revenue

Front

If the price elasticity of supply for pickles is 2 and the price of pickles increases by 10 percent, then the quantity supplied of pickles will increase by

Back

20%

Front

If a 10 percent increase in the price of good X results in a 20 percent decrease in the quantity of good Y demanded, which of the following is true?

Back

Good X and good Y are complementary goods, and the cross-price elasticity is -2.

Front

A change in which of the following will cause a change in the supply of personal computers (PC's) in the short run? Technology, Demand for PC's, Price of disks, which are a complement to PC's, Price of PC's, Consumers' incomes

Back

Technology

Front

Moving from left to right along a downward-sloping linear demand curve, price elasticity varies in which of the following ways?

Back

First elastic, then unit elastic, and finally inelastic

Front

Which of the following statements about the price elasticity of demand is true?
- When demand is price inelastic, total revenue will decrease as price increases.
- When demand is price elastic, an increase in price will increase total revenue.
- Demand tends to be more elastic in the short run compared to the long run.
- As more close substitutes become available, demand tends to be more price elastic.
- As a good becomes viewed as a necessity, demand becomes more price elastic.

Back

As more close substitutes become available, demand tends to be more price elastic.

Front

If a severe drought destroys a significant portion of the peanut crop and peanut farmers' revenues increase, which of the following is true over the observed range of prices? The demand for peanuts must be unit price elastic, price elastic, unit price inelastic, or the supply of peanuts must be price inelastic or price elastic.

Back

The demand for peanuts must be unit price inelastic.

Front

Assume that the price of orange juice increases by 40 percent following a crop failure. If the quantity demanded falls by 10 percent, which of the following is true?

Back

The absolute value of the price elasticity of demand for orange juice is 0.25.

Front

The price elasticity of demand for a product is 0.5. If the price of the product increases by 20 percent, what will occur?

Back

The quantity demanded of the good will decrease by 10%.

Front

If the demand for potatoes increases whenever a person's income increases, then potatoes are an example of

Back

A normal good