3-4

result of the price floor? X graph

$1,200

How much of the tax is paid by buyers? X graph

$3

Kendra's marginal graph

$3.00

deadweight loss... X graph

$600

At a price of $25, how many units will be sold? X graph

500.

market price falls from P2 to P1? Graph

A + B

Two Slanted Lines

D2 to D1

Prices of smartphones (assume that this is a normal good) have fallen in recent years. Over this same period, the price of the components used to produce smartphones has also fallen and consumer incomes have risen. Which of the following best explains the falling prices of smartphones?

The SUPPLY curve for smartphones has shifted to the right more than the demand curve has shifted to the RIGHT.

Tick tack toe graph

The equilibrium point will move from A to B.

Which of the following is evidence of a shortage of chocolate?

The quantity of chocolate demanded is greater than the quantity supplied.

If the United States lifts the embargo on Cuban products, what will happen in the U.S. market for Cuban cigars?

The supply curve will shift to the right.

Which of the following describes a characteristic of a perfectly competitive market?

There are many buyers and sellers.

An increase in population results in an increase in demand.

True.

Market equilibrium occurs where the quantity supplied is equal to the quantity demanded.

True.

The division of the burden of a tax between buyers and sellers in a market is called tax incidence.

True.

Buyers will bear the entire burden of a unit tax if the demand curve for a product is

Vertical

A decrease in the price of pork will result in

a SMALLER quantity of PORK supplied.

The minimum wage is an example of

a price floor.

Hurricane Katrina damaged a large portion of refining and pipeline capacity when it swept through the Gulf coast states in August 2005. As a result of this, many gasoline distributors were not able to maintain normal deliveries. At the pre-hurricane equilibrium price (i.e., at the initial equilibrium price), we would expect to see

a shortage of gasoline.

Electric car manufacturers want to sell more electric cars at a higher price. Which of the following events would have this effect?

an INCREASE in the price of gasoline.

If, in response to a decrease in the price of coffee, the quantity of coffee demanded increases, economists would describe this as

an increase in quantity demanded.

An increase in the demand for peanuts due to changes in consumer tastes, accompanied by an increase in the supply of peanuts as a result of favorable growing conditions, will result in

an increase in the equilibrium quantity of peanuts; the equilibrium PRICE may increase or decrease.

Compared to prices charged by Uber, traditional taxi companies charge government-regulated prices. These government-regulated prices ________ in the market for shared rides.

decrease consumer surplus

If the government implements a price ceiling on insulin, this will

decrease the quantity of insulin the manufacturers will be willing to supply.

The willingness of consumers to buy a product at different prices is shown on a

demand curve.

The difference between the ________ for a good and the ________ is called consumer surplus.

highest price a consumer is willing to pay; price the consumer actually pays

The additional cost to a firm of producing one more unit of a good or service is the

marginal cost.

In order to be binding, a price floor

must lie ABOVE

Suppose a drought resulted in a major reduction in the California lettuce crop. In the market for lettuce,

the SUPPLY curve shifted to the left resulting in an increase in the equilibrium price.

The substitution effect of a price change refers to

the change in quantity demanded that results from a change in price making a good more or less expensive relative to other goods that are substitutes.

A consumer is willing to purchase a product up to the point where

the marginal benefit is equal to the price of the product.

Assume that this is a competitive market. At an output of 30,000 units.. X graph

the marginal cost of iced tea

If in the market for bananas the supply curve has shifted to the right, then

the supply of bananas increased.

Suppose the demand curve for a product is downward sloping and the supply curve is upward sloping. If a unit tax is imposed in the market for this product,

the tax burden will be shared by buyers and sellers.

An increase in the equilibrium price for a product will result

when there is a DECREASE in supply and an INCREASE in demand FOR the product.