MICROECONOMICS PT1
Film streaming demand would increase and demand for movie tickets would fall.
cross-price elasticity of demand - Answer measure of how much the quantity demanded of
one good responds to a change in the price of another good, computed as the percentage
change in quantity demanded of the first good divided by the percentage change in the
price of the second good
efficiency - ANSWER the property of society getting the most it can from its scarce
resources
Explain each of the following statements using supply-and-demand diagrams.
a. "When a cold snap hits Florida, the price of orange juice rises in supermarkets
throughout the country."
b. "When the weather turns warm in New England every summer, the price of hotel rooms
in Caribbean resorts plummets."
c. "When a war breaks out in the Middle East, the price of gasoline rises and the price of a
used Cadillac falls." - ANSWERa. Supply reduces.
b. Demand for Caribbean resorts drops when it is hot in New England.
c. The supply of gas goes down and demand goes down for Cadillacs because they're not
as attractive.
For each of the following pairs of goods, which good would you expect to have more elastic
demand and why?
a. required textbooks or mystery novels
b. Beethoven recordings or classical music recordings in general
c. subway rides during the next 6 months or subway rides during the next 5 years
d. root beer or water - ANSWERa. mystery novels
b. Beethoven recordings
c. Subway rides during the next 5 years
d. root beer
Film streaming demand would increase and demand for movie tickets would fall.
cross-price elasticity of demand - Answer measure of how much the quantity demanded of
one good responds to a change in the price of another good, computed as the percentage
change in quantity demanded of the first good divided by the percentage change in the
price of the second good
efficiency - ANSWER the property of society getting the most it can from its scarce
resources
Explain each of the following statements using supply-and-demand diagrams.
a. "When a cold snap hits Florida, the price of orange juice rises in supermarkets
throughout the country."
b. "When the weather turns warm in New England every summer, the price of hotel rooms
in Caribbean resorts plummets."
c. "When a war breaks out in the Middle East, the price of gasoline rises and the price of a
used Cadillac falls." - ANSWERa. Supply reduces.
b. Demand for Caribbean resorts drops when it is hot in New England.
c. The supply of gas goes down and demand goes down for Cadillacs because they're not
as attractive.
For each of the following pairs of goods, which good would you expect to have more elastic
demand and why?
a. required textbooks or mystery novels
b. Beethoven recordings or classical music recordings in general
c. subway rides during the next 6 months or subway rides during the next 5 years
d. root beer or water - ANSWERa. mystery novels
b. Beethoven recordings
c. Subway rides during the next 5 years
d. root beer
