quizzes micro

Why does the demand curve slope downward?

Due to diminishing marginal utility and increasing opportunity cost.

What defines the supply curve?

The portion of the marginal cost curve above the average variable cost curve.

What happens when the demand curve increases?

The intercept increases.

What are the effects if the marginal cost of production increases?

Supply decreases and shifts up and to the left.

What happens as the market price decreases?

Consumer surplus increases.

What happens if the federal government does not tax wages from tipping?

There will be an increase in the demand for labor for tippable jobs and an increase in the supply of labor for tippable jobs.

What is the effect of Alabama increasing the gasoline tax by $0.30 per gallon on equilibrium price?

The equilibrium price of gasoline will increase by more than $0.30 per gallon or increase by less than $0.30 per gallon.

What does a horizontal demand curve indicate?

Perfectly elastic demand.

What is the cross-price elasticity between beer and cigarettes if it is -1.5?

If the price of cigarettes increases by 4%, the quantity demanded for beer will decrease by 6%.