C) Demand decreases

Explanation: When the expected price of butter falls, consumers anticipate lower prices in the future, leading to a decrease in current demand.

C) Normal good

Explanation: Normal goods have a positive income elasticity of demand, meaning that as income increases, the quantity demanded also increases.

B) The supply curve shifts to the right

Explanation: An increase in the number of firms in the market leads to an increase in overall supply, causing the supply curve to shift to the right.

A) -0.5

Explanation: The price elasticity of demand (Ed) is calculated as the percentage change in quantity demanded divided by the percentage change in price. Here, Ed = +10% / [(1.2-1.5)/1.5] x 100% = -0.5.

B) Shift of the demand curve

Explanation: A change in demand means a shift of the demand curve, which is caused by factors other than a change in price.

B) -0.4

Explanation: The price elasticity of demand (Ed) is calculated as the percentage change in quantity demanded divided by the percentage change in price. Here, Ed = -20% / [(12-8)/8] x 100% = -0.4.

C) Ed = 0

Explanation: Perfectly inelastic demand is characterized by Ed = 0, meaning the quantity demanded does not respond at all to a change in price.

D) Ed = 1

Explanation: When the percentage change in quantity demanded equals the percentage change in price, the price elasticity of demand is unit elastic, represented by Ed = 1.

B) Quantity demanded will decrease

Explanation: According to the Law of Demand, if the price of apples is $8, the quantity demanded is likely to decrease because higher prices lead to lower quantities demanded.

B) The study of individual decision-making units like firms and households

Explanation: Microeconomics focuses on the behavior of individual decision-making units such as firms and households.

B) Qd = 200 - 10P

Explanation: The market demand function provided in the example is Qd = 200 - 10P, which shows the relationship between quantity demanded (Qd) and price (P).

D) It depends on the elasticities of Demand and Supply

Explanation: The burden of the sales tax is distributed between consumers and sellers, and the extent of this distribution depends on the elasticities of Demand and Supply. The more inelastic side of the market will bear a greater burden of the tax.

C) Explicit cost + Implicit cost

Explanation: Opportunity cost is calculated as the sum of explicit cost and implicit cost, representing the total cost of the next best alternative foregone.

B) Higher market price leads to lower quantity demanded

Explanation: The Law of Demand states that, other things being equal, a higher market price leads to a lower quantity demanded and vice versa, resulting in a downward sloping demand curve.

B) Decreases the demand for the good

Explanation: A decrease in the price of a substitute, such as margarine, leads to an increase in the quantity demanded of the substitute and a decrease in the demand for the original good, such as butter.

C) Excess demand or shortage

Explanation: At a price lower than the equilibrium price, there is excess demand or shortage because the quantity demanded exceeds the quantity supplied (QD > QS).

B) Supply increases, equilibrium price decreases

Explanation: The introduction of new harvesting technology reduces production costs, increasing the supply of oranges. This shifts the supply curve to the right, leading to a decrease in the equilibrium price and an increase in the equilibrium quantity of oranges.

C) QS does not respond to a change in price

Explanation: In a perfectly inelastic supply scenario (Es = 0), the supply curve is vertical, and the quantity supplied does not respond at all to changes in price.

D) Supply curve shifts leftward

Explanation: A per unit sales tax imposed on the seller shifts the supply curve leftward, causing the market price to rise and the quantity to fall.

B) The horizontal summation of individual supply curves

Explanation: Market supply is the horizontal summation of individual supply curves into a market supply curve, meaning it aggregates the quantities supplied by all individual sellers at each price level.

B) Supply decreases, equilibrium price increases

Explanation: An early frost in Florida negatively impacts the supply of oranges, causing the supply curve to shift to the left. This reduction in supply leads to an increase in the equilibrium price and a decrease in the equilibrium quantity of oranges.

D) 15

Explanation: According to the provided data, if the price of apples is $8, the individual seller will supply 15 apples.

B) Excess supply or surplus (QS > QD)

Explanation: When the price is higher than the equilibrium price, there is excess supply or surplus because the quantity supplied (QS) exceeds the quantity demanded (QD).

B) Rice and Cotton

Explanation: Rice and Cotton are examples of competitive supply, where an increase in the price of one leads to an increase in its quantity supplied, which can affect the supply of the other.

C) Equilibrium price remains unchanged, equilibrium quantity rises

Explanation: When both demand and supply increase by the same amount, the demand curve and supply curve both shift to the right. This results in the equilibrium quantity rising while the equilibrium price remains unchanged.

B) Downward sloping

Explanation: According to the Law of Demand, the demand curve is typically downward sloping, indicating that as the price increases, the quantity demanded decreases, and vice versa.

B) The demand for the good increases

Explanation: When the price of a complement, such as bread, decreases, the quantity demanded of the complement increases, leading to an increase in the demand for the related good, such as butter.

C) The unemployment rate is currently 5%

Explanation: Positive economics explains the working of the economy in an objective way without making judgments, and positive statements concern what is, was, or will be. The statement about the unemployment rate is a factual, testable statement.

C) The chance of getting a higher grade

Explanation: The opportunity cost of going hiking instead of studying at the library is the chance of getting a higher grade, which you forgo by not studying.

C) Goods used to produce other goods or services over time

Explanation: Capital goods are goods that are already produced and will be used to produce other goods or services over time, such as machines, equipment, and computers.

C) Opportunity cost

Explanation: Making a choice in economics implies opportunity cost, which is the most valuable forsaken alternative or the highest valued option foregone to an act.

C) It is the same as accounting cost

Explanation: Opportunity cost is not the same as accounting cost. Accounting cost refers to explicit costs only, while opportunity cost includes both explicit and implicit costs.

C) Both buyers and sellers

Explanation: Regardless of whom the tax is levied on, both buyers and sellers share the tax burden, with buyers paying more and sellers receiving less.

C) By horizontal summation

Explanation: Market demand is derived by the horizontal summation of individual demand curves, which means adding up the quantities demanded by all consumers at each price level to form the market demand curve.

C) Demand increases

Explanation: A rise in population increases the number of consumers, which in turn increases the demand for butter, shifting the demand curve to the right.

B) The responsiveness of quantity demanded to a change in market price

Explanation: Price elasticity of demand measures how much the quantity demanded of a good responds to a change in the market price of that good.

C) Total revenue increases

Explanation: When demand is elastic, a decrease in price leads to a proportionally larger increase in quantity demanded, resulting in an increase in total revenue.

B) Q rises

Explanation: When the change in demand is less than the change in supply, the quantity (Q) rises. This is because the increase in supply is greater than the increase in demand, leading to a higher quantity available in the market.

B) High degree of input adjustment

Explanation: A greater ability of firms to adjust their inputs to production leads to more substitutes and a more elastic supply.

C) Buying an economics textbook

Explanation: If Person A chooses to buy a concert ticket instead of their first choice, which is buying an economics textbook, the opportunity cost is the economics textbook, the next best alternative foregone.

C) $30

Explanation: The equilibrium price is $30, where the quantity demanded (120) equals the quantity supplied (120), achieving market equilibrium.

C) Demand increases, equilibrium price increases

Explanation: An increase in population leads to a higher demand for oranges, assuming they are a normal good. This causes the demand curve to shift to the right, resulting in an increase in both the equilibrium price and quantity of oranges.

C) Quantity supplied increases

Explanation: Assuming other things being equal, an increase in the price of a commodity typically leads to an increase in the quantity supplied, reflecting the positive relationship between price and quantity supplied.

B) It studies how people make choices

Explanation: Economics is a social science that studies how people make choices and tries to explain and predict human behavior.

B) Demand is elastic

Explanation: If the price elasticity of demand is greater than 1, it indicates that the demand is elastic, meaning that the quantity demanded responds significantly to changes in price.

C) QS drops immediately to zero

Explanation: In a perfectly elastic supply scenario (Es = ∞), the supply curve is horizontal, and any small decrease in price causes the quantity supplied to drop immediately to zero.

B) Change in price of the good

Explanation: A change in quantity demanded is the movement along the same demand curve and is caused by a change in the price of the good.

B) Supply of eggs decreases

Explanation: Hens and eggs are in joint supply, so an increase in the price of hens leads to an increase in the quantity supplied of hens, which in turn affects the supply of eggs.

C) Elastic demand

Explanation: If Ed > 1, it indicates elastic demand, meaning the percentage change in quantity demanded is greater than the percentage change in price.

B) Change in household income

Explanation: A change in household income can cause a shift in the demand curve, affecting the demand for goods such as butter.

B) Hen and Egg

Explanation: Hen and Egg are examples of joint supply, where the production of one good (hens) directly affects the supply of another good (eggs).

B) It shifts rightward

Explanation: An increase in supply results in a rightward shift of the supply curve, indicating that more quantity is supplied at each price level.

B) Supply of rice decreases

Explanation: Rice and Cotton are in competitive supply, so an increase in the price of cotton leads to an increase in the quantity supplied of cotton, which can reduce the supply of rice.

B) The next best alternative foregone

Explanation: Opportunity cost is best described as the next best alternative foregone, representing the highest valued option that is not chosen when making a decision.

C) Demand increases

Explanation: An increase in the number of consumers due to immigration leads to a higher demand for butter, shifting the demand curve to the right.

C) Demand decreases

Explanation: When butter becomes outdated or disliked, consumer preference shifts away from it, leading to a decrease in demand.

C) When the supply curve is vertical

Explanation: In some cases, the supply curve is vertical, indicating that the quantity supplied cannot increase even if the price increases. This is an exceptional case compared to the typical upward sloping supply curve.

B) The study of how societies use scarce resources

Explanation: Economics is defined as the study of how individuals and societies choose to use scarce resources to satisfy unlimited wants.

B) Equilibrium price falls, equilibrium quantity rises

Explanation: When the increase in demand is less than the increase in supply, the demand curve and supply curve both shift to the right, but the supply curve shifts more. This results in the equilibrium price falling and the equilibrium quantity rising.

B) Equilibrium price rises, equilibrium quantity rises

Explanation: When the increase in demand is greater than the increase in supply, the demand curve and supply curve both shift to the right, but the demand curve shifts more. This results in both the equilibrium price and equilibrium quantity rising.

E) 140

Explanation: At a market price of $50, the quantity supplied is 140, as indicated in the supply schedule.

E) The effect on equilibrium price is indeterminate, equilibrium quantity increases

Explanation: When both the population increases (demand increases) and new harvesting technology is created (supply increases), the demand curve shifts to the right and the supply curve shifts to the right. The equilibrium quantity will definitely increase, but the effect on the equilibrium price is indeterminate as it depends on the relative magnitudes of the shifts in supply and demand.

D) They differ by the amount of the tax

Explanation: When a sales tax is imposed, the consumer price and seller price will differ by the amount of the tax. This means that the tax creates a wedge between what consumers pay and what sellers receive.

B) 150

Explanation: At the equilibrium price of $5, substituting P = 5 into either the demand or supply function gives Q = 150.

B) Ed = (% change in quantity demanded) / (% change in price)

Explanation: The formula for calculating the price elasticity of demand is Ed = (% change in quantity demanded) / (% change in price), which measures the responsiveness of quantity demanded to changes in price.

B) A government-imposed minimum permissible price

Explanation: A price floor is a government-imposed minimum permissible price at which a good may be sold, intended to keep prices above the equilibrium level.

D) P falls, Q is uncertain

Explanation: When supply increases more than demand, the price (P) must fall, but the quantity (Q) is uncertain. This is because the increase in supply puts downward pressure on the price, but the net effect on quantity depends on the relative magnitudes of the changes in supply and demand.

C) Because it is insufficient to satisfy all our wants

Explanation: Fresh air in Hong Kong is considered an economic good because its quantity is insufficient to satisfy all our wants, making it scarce.

C) More time leads to higher price elasticity of demand

Explanation: As more time passes, consumers have more opportunities to adjust their behavior and find alternatives, leading to higher price elasticity of demand.

C) Positively related

Explanation: For most commodities, the price of the commodity and the quantity that will be supplied are positively related, meaning that as the price increases, the quantity supplied also increases, resulting in an upward sloping supply curve.

B) Inverse relationship

Explanation: The Law of Demand describes an inverse relationship between price and quantity demanded, meaning that as the price increases, the quantity demanded decreases, and vice versa.

A) Total revenue increases

Explanation: In the elastic range of a linear demand curve, a decrease in price leads to a proportionally larger increase in quantity demanded, resulting in an increase in total revenue.

C) $5

Explanation: The equilibrium price is found where Qd = Qs. Solving 200 - 10P = 50 + 20P gives P = $5.

B) Goods produced for present consumption

Explanation: Consumer goods are goods produced for present consumption, such as bread.

A) Total revenue increases as price increases

Explanation: In the inelastic portion of a linear demand curve, a price increase leads to a smaller percentage decrease in quantity demanded, resulting in an increase in total revenue.

C) Excess supply of 90 units

Explanation: An effective price floor at $8 results in excess supply because the quantity supplied (210) exceeds the quantity demanded (120). The excess supply is 210 - 120 = 90 units.

B) An entity that is desired by at least one person

Explanation: In economics, a 'good' is defined as any entity that is desired by at least one person, indicating its value and demand.

B) The cost of the next best alternative foregone

Explanation: Opportunity cost refers to the cost of the next best alternative that is foregone when a choice is made, highlighting the trade-offs involved in decision-making.

B) $1.00

Explanation: The ceiling price of gasoline in the 1970s example was set at $1.00 per gallon.

C) Decide whether the event shifts the supply curve, demand curve, or both

Explanation: The first step in analyzing changes in equilibrium is to decide whether the event shifts the supply curve, demand curve, or both.

B) Supply of music downloads increases, equilibrium price falls, and quantity rises

Explanation: A reduction in royalties decreases the cost for sellers, leading to an increase in the supply of music downloads. This shifts the supply curve rightward, resulting in a lower equilibrium price and a higher equilibrium quantity.

C) Shifts demand to the right if in favor, to the left if against

Explanation: Changes in fashion and taste can significantly impact demand. If butter becomes more fashionable or preferred, demand shifts to the right. If it becomes less fashionable or disliked, demand shifts to the left.

A) It shifts leftward

Explanation: A decrease in supply results in a leftward shift of the supply curve, indicating that less quantity is supplied at each price level.

A) The money you would earn from working

Explanation: The opportunity cost of going swimming instead of working at your part-time job is the money you would have earned from working.

C) The responsiveness of quantity demanded to a change in income

Explanation: Income elasticity of demand measures how the quantity demanded of a good responds to changes in consumer income.

C) Demand is unit elastic

Explanation: A price elasticity of demand equal to 1 signifies that the demand is unit elastic, meaning that the percentage change in quantity demanded is exactly equal to the percentage change in price.

C) Total revenue increases

Explanation: When demand is inelastic, an increase in price leads to a proportionally smaller decrease in quantity demanded, resulting in an increase in total revenue.

C) Q remains unchanged

Explanation: When the change in demand equals the change in supply, the quantity (Q) remains unchanged. This is because the increases in demand and supply offset each other, leading to no net change in the quantity available in the market.

C) A greater percentage of the budget leads to higher price elasticity of demand

Explanation: When a larger portion of a consumer's budget is spent on a good, the price elasticity of demand is higher because price changes have a more significant impact on their overall spending.

C) The short run is a period too short for full adjustment to price changes

Explanation: In the short run, consumers do not have enough time to fully adjust to price changes, whereas the long run provides sufficient time for full adjustment.

B) The difference between description and judgment

Explanation: The standard interpretation of the normative-positive divide is based on the difference between description (positive economics) and judgment (normative economics).

C) The knowledge you would have gained from studying

Explanation: The opportunity cost of going hiking is the knowledge you would have gained from studying, which is the next best alternative forgone.

C) Unitarily Elastic

Explanation: A demand curve with Ed = 1 is described as unitarily elastic, meaning that the percentage change in quantity demanded is exactly equal to the percentage change in price.

C) Es = 1

Explanation: When the percentage change in quantity supplied is equal to the percentage change in price, the price elasticity of supply is unit elastic, or Es = 1.

C) The demand curve shifts to the right

Explanation: Favorable conditions, such as increased consumer preference, lead to an increase in demand, causing the demand curve to shift to the right.

B) Total revenue decreases as price decreases

Explanation: In the inelastic range of a linear demand curve, a decrease in price leads to a proportionally smaller increase in quantity demanded, resulting in a decrease in total revenue.

B) A luxury with many substitutes

Explanation: Products with high price elasticity of demand are typically luxuries with many substitutes, meaning consumers can easily switch to alternatives if the price changes.

B) (% ∆ in QD) / (% ∆ in income)

Explanation: The formula for income elasticity of demand is the percentage change in quantity demanded divided by the percentage change in income.

A) Consumers

Explanation: Consumers bear more of the tax burden because the absolute value of the elasticity of demand (0.5) is less than the elasticity of supply (0.8). This indicates that demand is more inelastic compared to supply.

B) A good that is sufficient to satisfy all our wants

Explanation: A free good is one that is sufficient to satisfy all our wants, meaning there is no problem of scarcity and we do not prefer to have more even if its price is zero.

C) Luxuries have higher price elasticity of demand

Explanation: Goods considered luxuries have higher price elasticity of demand because consumers are more sensitive to price changes for non-essential items.

C) Firms should maximize profits

Explanation: The statement 'Firms should maximize profits' is a normative statement because it includes a value judgment about what firms ought to do.

C) $2.00

Explanation: The full economic price is the sum of the ceiling price ($1) and the non-pecuniary price ($1), totaling $2 per gallon.

B) (Q2 - Q1) / (Q2 + Q1) / (P2 - P1) / (P2 + P1)

Explanation: The arc elasticity of demand is calculated using the mid-point formula: (Q2 - Q1) / (Q2 + Q1) / (P2 - P1) / (P2 + P1).

C) The quantity supplied increases

Explanation: According to the law of supply, a higher market price leads to a greater quantity supplied, other things being equal, resulting in an upward sloping supply curve.

B) The responsiveness of the quantity demanded of one good to a change in the price of another good

Explanation: Cross price elasticity of demand measures how the quantity demanded of one good (good X) responds to a change in the price of another good (good Y).

B) The behavior of aggregates such as national income and inflation

Explanation: Macroeconomics studies the economic behavior of aggregates, examining phenomena like aggregate output, price level, national income, economic growth, inflation, and employment.

C) 1.5

Explanation: Using the formula for price elasticity of demand, Ed = (% change in quantity demanded) / (% change in price), we find that Ed = [(160-120)/120] / [(30-20)/30] = 1.5.

A) At the midpoint of the demand curve

Explanation: Demand is unit elastic at the midpoint of a linear demand curve, where the percentage change in quantity demanded is equal to the percentage change in price.

B) Resources are allocated by central planners

Explanation: In a planned economy, resource allocation is dictated by central planners, such as the 5-year and 10-year plans used in Mainland China before the 1980s.

C) When resources are allocated to the one who bids the highest price

Explanation: Price competition occurs when people compete in terms of price, and the limited good is allocated to the one who bids the highest price for it.

B) When conflicts in choices are resolved by criteria other than price

Explanation: Non-price competition occurs when conflicts in choices are resolved by criteria other than price, such as beauty contests, university entrance exams, and queuing.

A) The price ceiling plus the nonpecuniary price

Explanation: The full economic price under a price ceiling is the dollar amount paid to a firm, which includes the price ceiling plus the nonpecuniary price (additional costs such as time or inconvenience).

B) The money you would have earned from the job

Explanation: The opportunity cost of going hiking is the money you would have earned from working at your part-time job, which is the next best alternative forgone.

B) Inelastic

Explanation: When the percentage change in quantity supplied is less than the percentage change in price, the supply is considered inelastic, meaning Es is between 0 and 1.

B) Demand for butter today decreases

Explanation: If consumers expect the price of butter to fall in the future, they are likely to delay their purchases, leading to a decrease in demand today.

C) Factors other than a change in price

Explanation: A change in supply means a shift of the supply curve, which is caused by factors other than a change in price, such as production costs or technological improvements.

A) Complements

Explanation: Complements have a negative cross price elasticity of demand because an increase in the price of one good (good Y) leads to a decrease in the demand for another good (good X).

D) Quantity demanded will decrease by a certain percentage

Explanation: The law of demand states that, all else being equal, an increase in the price of a good will lead to a decrease in the quantity demanded, though the exact percentage change depends on the price elasticity of demand.

B) Qs = 50 + 20P

Explanation: The market supply function provided in the example is Qs = 50 + 20P, which shows the relationship between quantity supplied (Qs) and price (P).

B) A government-imposed maximum permissible price

Explanation: A price ceiling is a government-imposed maximum permissible price at which a good may be sold, intended to keep prices below the equilibrium level.

B) They are inversely proportional

Explanation: In the elastic range of a demand curve, total revenue and price are inversely proportional; as price decreases, total revenue increases, and vice versa.

C) Its quantity is insufficient to satisfy all our wants

Explanation: An economic or scarce good is one whose quantity is insufficient to satisfy all our wants, leading to a preference for having more of it.

C) Gasoline prices in the 1970s

Explanation: Gasoline prices in the 1970s are an example of a price ceiling, where the government set a maximum legal price to control the cost of gasoline.

B) Using a map to navigate from point A to point B

Explanation: Using a map to navigate from point A to point B is an example of a simplifying assumption, as it abstracts reality to focus on essential details.

D) 86.4%

Explanation: With a price elasticity of demand of -8.64, a 10% decrease in price is expected to result in an 86.4% increase in quantity demanded.

C) Equilibrium price falls, and the effect on equilibrium quantity is uncertain

Explanation: When both events occur, the demand curve shifts leftward (due to the fall in the price of CDs) and the supply curve shifts rightward (due to the reduction in royalties). The equilibrium price must fall, but the effect on equilibrium quantity is ambiguous because the decrease in demand reduces quantity while the increase in supply raises quantity.

B) The price of a good expressed in terms of money

Explanation: Nominal price is the price of a good expressed in terms of money, as opposed to relative price, which is expressed in terms of another good.

C) At the midpoint of the demand curve

Explanation: Total revenue is maximized at the midpoint of a linear demand curve, where the price elasticity of demand is equal to one (unit elastic).

C) 120

Explanation: At a price floor of $8, the quantity demanded (Qd) is calculated using the demand function Qd = 200 - 10P. Substituting P = 8, we get Qd = 200 - 10(8) = 120.

E) 210

Explanation: At a price floor of $8, the quantity supplied (Qs) is calculated using the supply function Qs = 50 + 20P. Substituting P = 8, we get Qs = 50 + 20(8) = 210.

B) Present consumption

Explanation: Because resources are scarce, the opportunity cost of every investment in capital is forgone present consumption.

C) Sunlight

Explanation: Sunlight is an example of a free good because it is sufficient to satisfy all our wants and there is no problem of scarcity.

B) The minimum legal price that can be charged

Explanation: A price floor is the minimum legal price that can be charged for a good or service, often set by the government to ensure fair wages or to support producers.

C) If the price of apples goes up, then people will buy less of it

Explanation: The statement 'If the price of apples goes up, then people will buy less of it' is a positive economic statement because it describes a cause-and-effect relationship without making a value judgment.

B) $15

Explanation: The opportunity cost is calculated as 3 hours multiplied by $5 per hour, resulting in a total value of $15.

C) TR = P × Q

Explanation: Total Revenue (TR) is calculated by multiplying the price of a good (P) by the quantity of the good sold (Q).

B) Qs = 5 + 2P

Explanation: The given supply function in the text is Qs = 5 + 2P, which shows the relationship between quantity supplied (Qs) and price (P).

B) (% ∆ in QD of good X) / (% ∆ in P of good Y)

Explanation: The formula for cross price elasticity of demand is the percentage change in the quantity demanded of good X divided by the percentage change in the price of good Y.

C) An economy that allocates resources through decentralized decisions of many firms and households

Explanation: A market economy allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services, with price being a major mechanism in allocating scarce resources.

C) The tax burden is shared equally

Explanation: At market equilibrium, if the elasticity of demand equals the elasticity of supply, the tax burden will be shared equally between consumers and sellers.

C) Investment

Explanation: Investment is the process of using resources to produce new capital for future consumption.

B) The good is an inferior good

Explanation: A negative income elasticity of demand indicates that the good is an inferior good, meaning that as income increases, the quantity demanded decreases.

B) Fall in the price of CDs and fall in the cost of royalties

Explanation: The example describes a fall in the price of CDs and a fall in the cost of royalties as the events that affect the price and quantity of CDs. These events lead to changes in both supply and demand.

B) The maximum legal price that can be charged

Explanation: A price ceiling is defined as the maximum legal price that can be charged for a good or service, often set by the government to prevent prices from becoming too high.

B) To hold all other variables constant

Explanation: The ceteris paribus assumption is used to hold all other variables constant in order to focus on the relationship between the specified variables.

C) The economics textbook

Explanation: The opportunity cost of buying the jeans is the next best alternative you forgo, which in this case is the economics textbook.

C) Total revenue increases

Explanation: In the elastic portion of the demand curve (Ed > 1), a decrease in price leads to a proportionally larger increase in quantity demanded, thereby increasing total revenue.

B) Elastic supply

Explanation: A price elasticity of supply greater than 1 indicates elastic supply, meaning the percentage change in quantity supplied is greater than the percentage change in price.

B) Demand for butter increases

Explanation: Bread and butter are complementary goods. A decrease in the price of bread makes it cheaper for consumers to buy both, thus increasing the demand for butter.

B) It shifts rightward

Explanation: An increase in demand causes a rightward shift of the demand curve, indicating that more of the product is demanded at each price level.

B) Quantity supplied is at a certain price, supply is at all prices

Explanation: Quantity supplied refers to the amount a seller is willing and able to sell at a certain market price, while supply refers to the quantity supplied at all prices, thus it is a schedule.

C) An economy where both the government and the private sector jointly solve economic problems

Explanation: A mixed economy combines elements of both market and planned economies, where the government and the private sector jointly solve economic problems.

B) Sellers

Explanation: Sellers bear more of the tax burden because the elasticity of supply (1.5) is less than the absolute value of the elasticity of demand (2.5). This indicates that supply is more inelastic compared to demand.

B) +0.5

Explanation: The income elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in income. In this case, it is +5% / +10% = +0.5, indicating that golf balls are a normal good for Frankie.

B) Scarcity leads to limited choices and the presence of opportunity cost

Explanation: Scarcity necessitates making choices because resources are limited, and these choices involve opportunity costs, which are the benefits foregone from the next best alternative.

B) A state where resources are insufficient to satisfy all wants

Explanation: Scarcity is a state where the resources available are insufficient to satisfy all our wants, leading to the need for choice and opportunity cost.

C) -8.64

Explanation: The FTC Report by Michael Ward states that AT&T's price elasticity of demand for long distance services is -8.64, indicating a highly elastic demand.

C) It changes with different choices

Explanation: Opportunity cost changes with different choices because it represents the value of the next best alternative forgone when a decision is made.

D) Calculate the opportunity cost

Explanation: Calculating the opportunity cost is not a step in analyzing changes in equilibrium. The steps involve deciding which curve shifts, the direction of the shift, and using a supply-demand diagram to determine the new equilibrium.

B) TR decreases

Explanation: When demand is elastic, an increase in price leads to a proportionally larger decrease in quantity demanded, resulting in a decrease in Total Revenue (TR).

B) Movement along the same supply curve

Explanation: A change in quantity supplied is represented by a movement along the same supply curve, which is caused by a change in price.

C) $100 plus 2 hours of leisure

Explanation: The opportunity cost of taking the hotel job is the foregone benefits of the supermarket job, which include $100 (10 hours at $10 per hour) plus 2 hours of leisure.

B) The price of the pen in terms of another good

Explanation: Relative price refers to the price of a good expressed in terms of another good, such as the price of a pen in terms of a book.

B) Q falls

Explanation: When the change in demand is greater than the change in supply, the quantity (Q) falls. This is because the increase in demand outpaces the increase in supply, leading to a lower quantity available in the market.

C) More substitutes lead to higher price elasticity of demand

Explanation: The more substitutes available for a good, the higher the price elasticity of demand because consumers can easily switch to alternatives if the price changes.

B) To eliminate irrelevant details and focus on what really matters

Explanation: Economists use simplifying assumptions to eliminate irrelevant details and focus on the essential aspects of economic models, aiding the analytical process.

C) They concern what ought to be

Explanation: Normative statements concern what ought to be and are based on personal value judgments, making them non-testable.

C) It becomes more elastic

Explanation: In the long run, the demand curve becomes more elastic as consumers have more time to adjust to price changes, leading to a greater change in quantity demanded.

C) Demand increases

Explanation: When income increases, the demand for normal goods, such as butter, typically increases because consumers have more purchasing power.

B) The quantity a seller is willing and able to sell at all different prices

Explanation: The individual supply schedule shows how much of a given product a seller is willing and able to sell at all different market prices, other things being equal.

B) AT&T’s demand would decrease by 36.24 percent

Explanation: Given a cross price elasticity of 9.06, a 4 percent reduction in competitors' prices would lead to a 36.24 percent decrease in the demand for AT&T services (9.06 * 4% = 36.24%).

B) How much of a product a person is willing and able to buy at different prices

Explanation: The individual demand schedule shows how much of a given product a person is willing and able to buy at different prices, ceteris paribus.

C) Minimum wage

Explanation: Minimum wage is an example of a price floor, where the government sets a minimum legal price for labor to ensure workers receive fair compensation.

A) No choice means no opportunity cost

Explanation: Opportunity cost arises when a choice is made, implying that without a choice, there is no opportunity cost.

C) It falls slightly

Explanation: In the short run, the quantity demanded falls slightly because consumers have less time to adjust to price changes.

B) The responsiveness of quantity demanded to a large change in market price

Explanation: Arc elasticity measures the responsiveness of the quantity of a commodity demanded to a large change in market price, using the mid-point formula.

A) It shifts leftward

Explanation: A decrease in demand causes a leftward shift of the demand curve, indicating that less of the product is demanded at each price level.

C) Quantity supplied is the amount offered at a specific price, while supply refers to the entire relationship between price and quantity

Explanation: Quantity supplied refers to the amount of a good that producers are willing to sell at a specific price, while supply refers to the entire relationship between price and quantity supplied.

B) The amount a person is willing and able to buy at a certain market price

Explanation: Quantity demanded is the amount a person is willing and able to buy at a certain market price, as opposed to demand, which is the quantity demanded at all market prices.

B) The outcomes of economic behavior and evaluates them as good or bad

Explanation: Normative economics analyzes the outcomes of economic behavior and evaluates them based on personal value judgments, offering recommendations on what ought to be.

B) Lower price

Explanation: Since the demand is elastic (Ed > 1, specifically -8.64), lowering the price will increase the quantity demanded by a greater percentage than the price decline, resulting in higher total revenues for AT&T.

B) $15/15

Explanation: The non-pecuniary price per gallon is calculated by dividing the total value of time spent in line ($15) by the number of gallons purchased (15), resulting in $1 per gallon.

B) Demand for music downloads falls, equilibrium price and quantity fall

Explanation: When the price of compact discs, which are substitutes for music downloads, falls, the demand for music downloads decreases. This causes the demand curve to shift leftward, leading to a decrease in both equilibrium price and quantity.

A) TR increases

Explanation: When demand is inelastic, an increase in price leads to a proportionally smaller decrease in quantity demanded, resulting in an increase in Total Revenue (TR).

C) An increase in labor costs

Explanation: An increase in labor costs is an example of a factor that can cause a shift in the supply curve, as it affects the production costs for firms.

B) Decreases demand for butter

Explanation: Margarine is a substitute for butter. A decrease in the price of margarine makes it more attractive to consumers, leading to a decrease in the demand for butter.

B) Substitutes

Explanation: Substitutes have a positive cross price elasticity of demand because an increase in the price of one good (good Y) leads to an increase in the demand for another good (good X).

C) It shifts the supply curve to the right

Explanation: Technological improvement in production methods typically shifts the supply curve to the right, indicating an increase in supply due to more efficient production.

B) $96 plus a case of beer

Explanation: The opportunity cost of taking the supermarket job is the foregone benefits of the hotel job, which include $96 (12 hours at $8 per hour) plus a free case of beer.