Side-by-Side Graphs - AP Microeconomics
Card 0 of 209
A price ceiling that is set above the market equilibrium price is likely to have which of the following effects, if any?
A price ceiling that is set above the market equilibrium price is likely to have which of the following effects, if any?
If a price ceiling is set above market equilibrium, market forces will cause the equilibrium price to be market equilibrium price. The price ceiling will never be reached because it is too high.
To create an effective price ceiling, on the other hand, the price ceiling must be set below market equilibrium price, thus stopping price levels before they can reach market equilibrium. In such a case, a shortage is expected.
If a price ceiling is set above market equilibrium, market forces will cause the equilibrium price to be market equilibrium price. The price ceiling will never be reached because it is too high.
To create an effective price ceiling, on the other hand, the price ceiling must be set below market equilibrium price, thus stopping price levels before they can reach market equilibrium. In such a case, a shortage is expected.
Compare your answer with the correct one above
A price ceiling that is set above the market equilibrium price is likely to have which of the following effects, if any?
A price ceiling that is set above the market equilibrium price is likely to have which of the following effects, if any?
If a price ceiling is set above market equilibrium, market forces will cause the equilibrium price to be market equilibrium price. The price ceiling will never be reached because it is too high.
To create an effective price ceiling, on the other hand, the price ceiling must be set below market equilibrium price, thus stopping price levels before they can reach market equilibrium. In such a case, a shortage is expected.
If a price ceiling is set above market equilibrium, market forces will cause the equilibrium price to be market equilibrium price. The price ceiling will never be reached because it is too high.
To create an effective price ceiling, on the other hand, the price ceiling must be set below market equilibrium price, thus stopping price levels before they can reach market equilibrium. In such a case, a shortage is expected.
Compare your answer with the correct one above
If the market for Good X is in equilibrium, which of the following would NOT cause a decrease in demand for Good X?
If the market for Good X is in equilibrium, which of the following would NOT cause a decrease in demand for Good X?
Of the five answer choices, only an increase in the price of a substitute good would cause the demand curve to increase. This result reflects the fact that when the price of the substitute good increases, consumers are less likely to buy that good and instead buy more of Good X.
All of the other answer choices would cause the demand curve to decrease.
Of the five answer choices, only an increase in the price of a substitute good would cause the demand curve to increase. This result reflects the fact that when the price of the substitute good increases, consumers are less likely to buy that good and instead buy more of Good X.
All of the other answer choices would cause the demand curve to decrease.
Compare your answer with the correct one above
As consumption of a particular good increases, the satisfaction gained from consuming one additional unit of the good eventually .
As consumption of a particular good increases, the satisfaction gained from consuming one additional unit of the good eventually .
The law of diminishing marginal utility states that as consumption of a particular good increases, the satisfaction gained from consuming one additional unit (i.e. the marginal utility of the good) eventually decreases.
For example, consider eating chocolate bars. The increase in satisfaction resulting from eating the first chocolate bar is probably higher than the increase in satisfaction from eating the 12th chocolate bar. In other words, the marginal utility has decreased.
The law of diminishing marginal utility states that as consumption of a particular good increases, the satisfaction gained from consuming one additional unit (i.e. the marginal utility of the good) eventually decreases.
For example, consider eating chocolate bars. The increase in satisfaction resulting from eating the first chocolate bar is probably higher than the increase in satisfaction from eating the 12th chocolate bar. In other words, the marginal utility has decreased.
Compare your answer with the correct one above
If good X and good Y are substitutes, an increase in the price of good X will lead to which of the following?
If good X and good Y are substitutes, an increase in the price of good X will lead to which of the following?
The change in price of a substitute good shifts demand.
An increase in the price of good X prompts consumers to use good Y instead of good X (i.e. substituting good X for good Y), resulting in increased demand for good Y.
The change in price of a substitute good shifts demand.
An increase in the price of good X prompts consumers to use good Y instead of good X (i.e. substituting good X for good Y), resulting in increased demand for good Y.
Compare your answer with the correct one above
If the market for Good X is in equilibrium, which of the following would NOT cause a decrease in demand for Good X?
If the market for Good X is in equilibrium, which of the following would NOT cause a decrease in demand for Good X?
Of the five answer choices, only an increase in the price of a substitute good would cause the demand curve to increase. This result reflects the fact that when the price of the substitute good increases, consumers are less likely to buy that good and instead buy more of Good X.
All of the other answer choices would cause the demand curve to decrease.
Of the five answer choices, only an increase in the price of a substitute good would cause the demand curve to increase. This result reflects the fact that when the price of the substitute good increases, consumers are less likely to buy that good and instead buy more of Good X.
All of the other answer choices would cause the demand curve to decrease.
Compare your answer with the correct one above
As consumption of a particular good increases, the satisfaction gained from consuming one additional unit of the good eventually .
As consumption of a particular good increases, the satisfaction gained from consuming one additional unit of the good eventually .
The law of diminishing marginal utility states that as consumption of a particular good increases, the satisfaction gained from consuming one additional unit (i.e. the marginal utility of the good) eventually decreases.
For example, consider eating chocolate bars. The increase in satisfaction resulting from eating the first chocolate bar is probably higher than the increase in satisfaction from eating the 12th chocolate bar. In other words, the marginal utility has decreased.
The law of diminishing marginal utility states that as consumption of a particular good increases, the satisfaction gained from consuming one additional unit (i.e. the marginal utility of the good) eventually decreases.
For example, consider eating chocolate bars. The increase in satisfaction resulting from eating the first chocolate bar is probably higher than the increase in satisfaction from eating the 12th chocolate bar. In other words, the marginal utility has decreased.
Compare your answer with the correct one above
If good X and good Y are substitutes, an increase in the price of good X will lead to which of the following?
If good X and good Y are substitutes, an increase in the price of good X will lead to which of the following?
The change in price of a substitute good shifts demand.
An increase in the price of good X prompts consumers to use good Y instead of good X (i.e. substituting good X for good Y), resulting in increased demand for good Y.
The change in price of a substitute good shifts demand.
An increase in the price of good X prompts consumers to use good Y instead of good X (i.e. substituting good X for good Y), resulting in increased demand for good Y.
Compare your answer with the correct one above
If the market for Good X is in equilibrium, which of the following would NOT cause a decrease in demand for Good X?
If the market for Good X is in equilibrium, which of the following would NOT cause a decrease in demand for Good X?
Of the five answer choices, only an increase in the price of a substitute good would cause the demand curve to increase. This result reflects the fact that when the price of the substitute good increases, consumers are less likely to buy that good and instead buy more of Good X.
All of the other answer choices would cause the demand curve to decrease.
Of the five answer choices, only an increase in the price of a substitute good would cause the demand curve to increase. This result reflects the fact that when the price of the substitute good increases, consumers are less likely to buy that good and instead buy more of Good X.
All of the other answer choices would cause the demand curve to decrease.
Compare your answer with the correct one above
As consumption of a particular good increases, the satisfaction gained from consuming one additional unit of the good eventually .
As consumption of a particular good increases, the satisfaction gained from consuming one additional unit of the good eventually .
The law of diminishing marginal utility states that as consumption of a particular good increases, the satisfaction gained from consuming one additional unit (i.e. the marginal utility of the good) eventually decreases.
For example, consider eating chocolate bars. The increase in satisfaction resulting from eating the first chocolate bar is probably higher than the increase in satisfaction from eating the 12th chocolate bar. In other words, the marginal utility has decreased.
The law of diminishing marginal utility states that as consumption of a particular good increases, the satisfaction gained from consuming one additional unit (i.e. the marginal utility of the good) eventually decreases.
For example, consider eating chocolate bars. The increase in satisfaction resulting from eating the first chocolate bar is probably higher than the increase in satisfaction from eating the 12th chocolate bar. In other words, the marginal utility has decreased.
Compare your answer with the correct one above
If good X and good Y are substitutes, an increase in the price of good X will lead to which of the following?
If good X and good Y are substitutes, an increase in the price of good X will lead to which of the following?
The change in price of a substitute good shifts demand.
An increase in the price of good X prompts consumers to use good Y instead of good X (i.e. substituting good X for good Y), resulting in increased demand for good Y.
The change in price of a substitute good shifts demand.
An increase in the price of good X prompts consumers to use good Y instead of good X (i.e. substituting good X for good Y), resulting in increased demand for good Y.
Compare your answer with the correct one above
A price ceiling that is set above the market equilibrium price is likely to have which of the following effects, if any?
A price ceiling that is set above the market equilibrium price is likely to have which of the following effects, if any?
If a price ceiling is set above market equilibrium, market forces will cause the equilibrium price to be market equilibrium price. The price ceiling will never be reached because it is too high.
To create an effective price ceiling, on the other hand, the price ceiling must be set below market equilibrium price, thus stopping price levels before they can reach market equilibrium. In such a case, a shortage is expected.
If a price ceiling is set above market equilibrium, market forces will cause the equilibrium price to be market equilibrium price. The price ceiling will never be reached because it is too high.
To create an effective price ceiling, on the other hand, the price ceiling must be set below market equilibrium price, thus stopping price levels before they can reach market equilibrium. In such a case, a shortage is expected.
Compare your answer with the correct one above
Use the following graph for questions 9 - 11
Increasing the price of oranges at point D will result in:
- An increase in total revenue
- A decrease in quantity demanded
- Movement toward a portion of the demand curve that is more elastic
Use the following graph for questions 9 - 11
Increasing the price of oranges at point D will result in:
- An increase in total revenue
- A decrease in quantity demanded
- Movement toward a portion of the demand curve that is more elastic
If we are in the inelastic portion of the demand curve, an increase in price will increase TR, since the price effect is greater than the quantity effect. Quantity will still decrease.
If we are in the inelastic portion of the demand curve, an increase in price will increase TR, since the price effect is greater than the quantity effect. Quantity will still decrease.
Compare your answer with the correct one above
Use the following graph to answer questions 9-11:
What is the total revenue generated at point A?
Use the following graph to answer questions 9-11:
What is the total revenue generated at point A?
Total revenue is price multiplied by quantity (TR = P x Q). At point A, price is \$10 and quantity is 2, so TR = 2 x 10 = 20.
Total revenue is price multiplied by quantity (TR = P x Q). At point A, price is \$10 and quantity is 2, so TR = 2 x 10 = 20.
Compare your answer with the correct one above
For any firm, the long run refers to a period of time in which .
For any firm, the long run refers to a period of time in which .
The definition of the long run is a period of time in which fixed costs are able to change. For example, in the long run, a firm can move to a new plant that costs less money to operate each month.
Sunk costs are costs that cannot be recovered and therefore would not change, even in the long run.
The price elasticity of supply refers to the responsiveness of the supply curve to a change in price.
The definition of the long run is a period of time in which fixed costs are able to change. For example, in the long run, a firm can move to a new plant that costs less money to operate each month.
Sunk costs are costs that cannot be recovered and therefore would not change, even in the long run.
The price elasticity of supply refers to the responsiveness of the supply curve to a change in price.
Compare your answer with the correct one above
To maximize profits, firms produce at the level at which .
To maximize profits, firms produce at the level at which .
The profit maximizing rule for the firm is marginal revenue equals marginal cost. Notice that the rule does not explicitly involve average total or average variable costs.
The MR=MC profit maximizing rule holds for all market structures - monopoly, oligopoly, monopolistic competition, and perfect competition.
If marginal revenue is less than marginal cost, then the firm actually loses profits with continued production.
The profit maximizing rule for the firm is marginal revenue equals marginal cost. Notice that the rule does not explicitly involve average total or average variable costs.
The MR=MC profit maximizing rule holds for all market structures - monopoly, oligopoly, monopolistic competition, and perfect competition.
If marginal revenue is less than marginal cost, then the firm actually loses profits with continued production.
Compare your answer with the correct one above
The demand for oranges at point D is:
The demand for oranges at point D is:
For a demand curve, the upper left portion is elastic, the middle portion is unit elastic and the lower right portion is inelastic. You can confirm by calculating E = percent change in quantity/ percent change in price between the points on the lower right portion of the demand curve. If E < 1, then demand is inelastic.
For a demand curve, the upper left portion is elastic, the middle portion is unit elastic and the lower right portion is inelastic. You can confirm by calculating E = percent change in quantity/ percent change in price between the points on the lower right portion of the demand curve. If E < 1, then demand is inelastic.
Compare your answer with the correct one above
Suppose that as result of a 10% increase in income, the quantity demanded of Good X increases by 20%. Which of the following is true?
Suppose that as result of a 10% increase in income, the quantity demanded of Good X increases by 20%. Which of the following is true?
Remember that incomce elasticity of demand refers to the percent change in the quantity demanded of a good divided by the percent change in income. Since the percent change in the quantity demanded of Good X was 20% and the percent change in income was 10%, the income elasticity of demand for Good X is 20%/10% = 2. Thus, the income elasticity of demand for Good X is greater than 1.
Good X would be classified as an inferior good only if it had income elasticity of demand less than 0.
Remember that incomce elasticity of demand refers to the percent change in the quantity demanded of a good divided by the percent change in income. Since the percent change in the quantity demanded of Good X was 20% and the percent change in income was 10%, the income elasticity of demand for Good X is 20%/10% = 2. Thus, the income elasticity of demand for Good X is greater than 1.
Good X would be classified as an inferior good only if it had income elasticity of demand less than 0.
Compare your answer with the correct one above
Which of the following statements describes price discrimination?
Which of the following statements describes price discrimination?
Price discrimination occurs when a firm sets two different price levels for different consumers buying the same product. For example, a firm may sell a particular pharmaceutical drug for one price in the US and another price in Europe.
Answer choice "The price of a particular product is less than the marginal cost of producing that product" refers to the rare situation in which a firm sells a good for less than it costs to make it. This may happen in the case of promotions, but is not an example of price discrimination.
The other answer choices represent distortions of the definition of price discrimination and are therefore incorrect.
Price discrimination occurs when a firm sets two different price levels for different consumers buying the same product. For example, a firm may sell a particular pharmaceutical drug for one price in the US and another price in Europe.
Answer choice "The price of a particular product is less than the marginal cost of producing that product" refers to the rare situation in which a firm sells a good for less than it costs to make it. This may happen in the case of promotions, but is not an example of price discrimination.
The other answer choices represent distortions of the definition of price discrimination and are therefore incorrect.
Compare your answer with the correct one above
Which of the following is true of the relationship between the demand curve and the marginal revenue curve in a monopolistic structure?
Which of the following is true of the relationship between the demand curve and the marginal revenue curve in a monopolistic structure?
A monopolist faces a downward sloping demand curve, indicating market power, in contrast to the horizontal demand curve faced by perfectly competitive firms. A monopolist faces a downward sloping marginal revenue curve as well.
The monopolist's marginal revenue curve has the same y-intercept (intercept on the price-axis) as the demand curve, but has a steeper slope. Therefore, the demand curve is always equal to (at the intercept) or greater than (everywhere after the intercept) the marginal revenue curve. Answer choice "The demand curve is always greater than or equal to the marginal revenue curve" is correct.
The other answer choices are distortions of this relationship.
A monopolist faces a downward sloping demand curve, indicating market power, in contrast to the horizontal demand curve faced by perfectly competitive firms. A monopolist faces a downward sloping marginal revenue curve as well.
The monopolist's marginal revenue curve has the same y-intercept (intercept on the price-axis) as the demand curve, but has a steeper slope. Therefore, the demand curve is always equal to (at the intercept) or greater than (everywhere after the intercept) the marginal revenue curve. Answer choice "The demand curve is always greater than or equal to the marginal revenue curve" is correct.
The other answer choices are distortions of this relationship.
Compare your answer with the correct one above