WGU D089 Principles of Economics

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20 terms Trac An industry is operating in an inelastic range of the market demand curve.What happens to the total revenue in the industry if the market supply increases?It decreases because the market price decreases in an inelastic portion of the demand curve.When demand is inelastic (price elasticity less than one), price and total revenue move in what direction?the same direction.When demand is elastic (price elasticity greater than one), price and total revenue move in what direction?opposite directions.When demand is unit elastic (price elasticity exactly equal to one) total revenue remains constant when the price changes.Which demand factor is represented by the sale of the apparel for the small college basketball team?Taste and preferences What is the effect, if any, on the supply curve because of the change in transportation cost?The curve will shift to the left-Transportation costs are input costs for the online company. As these costs increase, the supply will decrease.Why did the company decide to reduce prices at the end of the season?Reduction of surplus What is the price elasticity of demand for Team A's football jersey?Elastic What was the price elasticity of supply for the college basketball team's jersey?Inelastic

equilibrium priceThe price where the quantity demanded is equal to the quantity supplied equilibrium quantitythe quantity bought and sold at the equilibrium price demand elasticitythe degree to which demand for a product is affected by its price Quantity Demanded (Qd)the amount of a good that buyers are willing and able to purchase What is a demand schedule?A table that shows the quantity of a good demanded at different prices What is a demand curve?A graphical representation of the relationship between the price of a good and the quantity demanded Law of Demandconsumers will buy more of a good when its price is lower and less when its price is higher An economist is trying to identify how consumer appetite for a particular good is influenced by the price of the good. The researcher hopes to produce a table that will list how much of the good consumers desire at several specific price points.What is the economist producing?Demand schedule Which concept refers to the amount of a good or service consumers both desire and are able to purchase at a variety of price levels and at a given time?Demand Dairy producers have recently experienced a sharp decrease in demand for their product.Which factor explains this decrease?A lower price for a substitute product A family has recently experienced an increase in household income.Which outcome results from this increase?Increase in demand of normal goods What is the relationship between price and quantity supplied?As price goes up, quantity supplied goes up.What causes a change in a market's equilibrium? When market events shift either the supply or demand curves, the market equilibrium will shift.What is the outcome when the price is above the equilibrium?Suppliers will produce more than the quantity demanded, and a surplus will exist.Which response should be expected if a competitive coffee market is in equilibrium and consumers in the market see an increase of income across the board?The demand curve shifts to the right, implying a willingness for consumers to pay more.

In the market for hats, the absolute value of the price elasticity of demand in the relevant price range is equal to 2, and the market price increases by 5%.What happens to the equilibrium quantity in the hat market under these conditions?Using the price elasticity formula, the price increase gives a decrease of 10%. (10% change in demand / 5% change in price) = 2 A supply curve is graphed with quantity supplied on the x-axis and price on the y-axis.How does technology affect this type of curve?Moves the curve outward to the right A supply curve is graphed with quantity supplied on the x-axis and price on the y-axis.What happens to the supply curve when there is a decrease in supply?When there is a decrease in supply of a product or service, the line shifts to the left or inwards. When the supply changes, the entire supply curve will shift. When the supply decreases, the line will move to the left.A supply curve is graphed with the quantity supplied on the x-axis and price on the y-axis.How does increasing the number of suppliers affect this curve?When a market experiences an increase in the number of suppliers for a product or service, the result is an increase in the overall quantity supplied in the market.Increasing the quantity of suppliers results in a shift of the supply curve to the right.