Question 1

If the price of hotdogs rises significantly, what is the most likely effect on the equilibrium price and quantity in the ketchup market, assuming hotdogs and ketchup are economic complements?

Accepted Answer

The demand for ketchup will decrease, lowering both equilibrium price and quantity.

Question 2

Suppose the price of hotdogs increases. What is the expected effect on the tomato market, given that tomatoes are a key input in ketchup production?

Accepted Answer

Demand for tomatoes will decrease, lowering equilibrium price and quantity.

Question 3

If the price of tomatoes falls due to decreased demand for ketchup, what is the likely effect on the tomato juice market?

Accepted Answer

Supply of tomato juice will shift right, decreasing price and increasing quantity.

Question 4

If orange juice is a substitute for tomato juice, what happens to the orange juice market when the price of hotdogs rises?

Accepted Answer

Demand for orange juice decreases, lowering equilibrium price and quantity.

Question 5

Given the following price and quantity pairs for hockey jerseys: $P_1 = 400$, $Q_1 = 200$ and $P_2 = 350$, $Q_2 = 220$, calculate the price elasticity of demand using the midpoint formula.

Accepted Answer

$\frac{(220-200)/210}{(350-400)/375} = -0.71$

Question 6

If the cost to manufacture each jersey is $50 and the team sells 245 jerseys at $300 each, what is the total revenue?

Accepted Answer

$245 	imes 300 = 73,500$

Question 7

Based on the calculated elasticities (all less than 1 in absolute value), what pricing strategy should the hockey team use to maximize revenue?

Accepted Answer

Raise the price, as demand is inelastic and total revenue will increase.

Question 8

If 25% of jerseys sold feature the top player 'David Lightning', and he is traded to another team, what is the most likely effect on the demand curve for his jerseys?

Accepted Answer

The demand curve shifts left, decreasing equilibrium price and quantity.

Question 9

Why might the team sell 'David Lightning' jerseys for $100 after he is traded, even though they previously sold for $300?

Accepted Answer

Demand for his jersey has decreased, so lowering the price helps sell remaining inventory.

Question 10

If the price elasticity of demand for jerseys between $P = 250$ and $P = 200$ is $-0.79$, what does this imply about consumer responsiveness?

Accepted Answer

Consumers are not very responsive to price changes (inelastic demand).

Question 11

Suppose the team wants to maximize profit, not just revenue. If the marginal cost is $50$ per jersey and the current price is $300$, what additional information is needed to determine the profit-maximizing quantity?

Accepted Answer

The marginal revenue at each quantity.

Question 12

If the demand for ketchup decreases due to a rise in hotdog prices, what is the likely effect on the market for tomatoes, a key input for ketchup?

Accepted Answer

Demand for tomatoes decreases, lowering both equilibrium price and quantity.

Question 13

If the price of jerseys is lowered from $300$ to $250$, and quantity sold increases from $245$ to $285$, what is the percentage change in quantity demanded?

Accepted Answer

$\frac{285-245}{(285+245)/2} 	imes 100 \approx 15.1\%$

Question 14

Which of the following best describes the relationship between hotdogs and ketchup in the context of consumer demand?

Accepted Answer

They are complementary goods.

Question 15

If the supply curve for tomato juice shifts right due to a fall in tomato prices, what happens to the equilibrium price and quantity of tomato juice?

Accepted Answer

Equilibrium price decreases and equilibrium quantity increases.

Question 16

If the elasticity of demand for jerseys is consistently less than 1 in absolute value across all price intervals, what does this suggest about the market for jerseys?

Accepted Answer

Demand is inelastic, and raising price will increase total revenue.

Question 17

If the team raises the price of jerseys and observes that total revenue increases, what can be inferred about the price elasticity of demand in this range?

Accepted Answer

Demand is inelastic in this range.

Question 18

A local hockey team is the exclusive seller of its jerseys. If the team wants to increase total revenue and the demand for jerseys is inelastic, what should it do?

Accepted Answer

Increase the price of jerseys.

Question 19

If the price of hotdogs rises and orange juice is a substitute for tomato juice, what is the likely effect on the demand for orange juice?

Accepted Answer

Demand for orange juice decreases.

Question 20

If the team sells 970 jerseys at $50$ each, what is the total revenue, and how does this compare to selling 245 jerseys at $300$ each?

Accepted Answer

$970 	imes 50 = 48,500$, which is less than $245 	imes 300 = 73,500$

Microeconomics Study Guide: Supply, Demand, and Elasticity (Hockey Markets)

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