... Chapter 4: Individual and Market Demand
41
CHAPTER 4
INDIVIDUAL AND MARKET DEMAND
QUESTIONS FOR REVIEW
1. Explain the difference ... could be either complements or substitutes. The math class may illuminate
Chapter 4: Individual and Market Demand
44
economics, and the economics class can motivate mathematics. If the classes ... curve. Arc elasticity estimates
the elasticity over...
... Chapter 7: The Costs of Production
84
CHAPTER 7
THE COST OF PRODUCTION
QUESTIONS FOR REVIEW
1. A firm pays its accountant an annual ... child or elderly person at home, which would have had a
value to those receiving the service.
4. Suppose that labor is the only variable input to the production process. If the
marginal cost ... scale and economies of scope, so production
can exhib...
...
Price
Quantity
P
1
P
2
Consumer Surplus
D
Q
1
Q
2
Figure 11.3
161
Chapter 11: Pricing with Market Power
162
4. Give some examples of third-degree price discrimination. Can third-degree price
discrimination ... demand relative to consumers of more “basic”
packages.
Chapter 11: Pricing with Market Power
1 64
7. How is peak-load pricing a form of price discrimination? Can it make co...
... The price of long-distance telephone service fell from 40 cents per minute in 1996
to 22 cents per minute in 1999, a 45 -percent (18 cents /40 cents) decrease. The
Consumer Price Index increased ... education has increased? How have these changes
affected consumer choices?
Chapter 1: Preliminaries
4
The price and quantity of goods (e.g., eggs) and services (e.g., a college
education...
... This is in the elastic region of the demand curve,
where the elasticity of demand exceeds -1.0.
4. Explain the difference between a shift in the supply curve and a movement along
the supply curve. ... at the price of $2.00. Q=10-
2(2)+2=8.
Price elasticity of demand =
P
Q
Δ
Q
ΔP
=
2
8
(−2) =−
4
8
=−0.5.
Cross-price elasticity of demand =
P
s
Q
Δ
Q
ΔP
s
=
2
8
(1) = 0.25.
12. Suppose...
... satisfaction. For
example, if the slope of the budget line (the ratio of the prices) is 4 then the
consumer can trade 4 units of good 2 for one unit of good 1. If the MRS at the
current bundle is –6, ... preferences, Bill is willing to trade 4 movie tickets for 1 ticket to a
basketball game. If movie tickets cost $8 each and a ticket to the basketball game costs
$40 , should Bill m...
... Chapter 5: Uncertainty and Consumer Behavior
64
CHAPTER 5
UNCERTAINTY AND CONSUMER BEHAVIOR
QUESTIONS FOR REVIEW
1. What does it mean to say ... risk
averse he may choose fund A even if it subject to more variability in its
expected return.
4. What does it mean for consumers to maximize expected utility? Can you think
of a case where
...
MRTS =4 mean?
MRTS is the amount by which the quantity of one input can be reduced
when the other input is increased by one unit, while maintaining the same
level of output. If the MRTS is 4 then ... employees must
share the computers, the marginal product of each additional employee will
diminish.
4. You are an employer seeking to fill a vacant position on an assembly line. Are
yo...
... Entry
will stop, and equilibrium will be achieved, when economic profits have
fallen to zero.
4. What is the difference between economic profit and producer surplus?
While economic profit is ... subtracted from these profits. If the
Chapter 8: Profit Maximization and Competitive Supply
1 04
revenue minus other costs is just equal to what could be earned elsewhere,
then the owner is ....
... relatively inelastic)
consumers in the aggregate will enjoy an increase in consumer surplus.
4. Suppose the government regulates the price of a good to be no lower than some
minimum level.