ECON 2020 chapters 5 & 6

melvin's magnets earned $200 in total revenue last month when in sold 100 souvenir magnets. this month it earned $300 in total revenue when it sold 60 souvenir magnets. the price elasticity of demand for marvins magnet is

0.58

a 10% increase in gasoline prices reduces gasoline consumption by about

2.5% after one year and 6% after 5 years

a tax on the buyers of personal computer external hard drives encourages

buyers to demand a smaller quantity at every price

A

mark says he would buy one Mt. dew per day regardless of the price. if this is true, the marks demand for mt. dew is represented by demand curve

a binding minimum wage tends to

cause labor surplus, cause unemployment, and have a great impact in the market for teenage labor

if the government levies a $2 tax per DVD on buyers of DVDs, then price received by sellers of DVDs would

decrease by less than $2

the supply of aged cheddar cheese is inelastic, and the supply for bread is elastic. both goods are considered to be normal goods by a majority of consumers. suppose that a large income tax increase decreases the demand for both goods by 10%. the equilibrium price will

decrease in both aged cheddar cheese and bread markets

kevin tunes pianos. if the demand for piano tuning services is elastic, kevin could increase his total revenue by

decreasing the price of his piano tuning services

when small changes in price lead to infinite changes in quantity demanded, demand is perfectly

elastic, and the demand curve will be horizontal

holding all other factors constant and using the midpoint method, if a calculator manufacturer increases production from 40 to 50 units when price increases by 20%, then supply is

elastic, since the price elasticity of supply is equal to 1.1

any price below $6

for a price ceiling to be binging in this market, it would have to be set at

the supply of aged cheddar cheese is inelastic, and the supply for bread is elastic. both goods are considered to be normal goods by a majority of consumers. suppose that a large income tax increase decreases the demand for both goods by 10%. the change in equilibrium price will be

greater in the aged cheddar cheese market than in the bread market

$24

how much tax revenue does this tax produce for the government

binding if market demand is demand A or demand B

if the government imposes a price ceiling at $3 it would be

non-binding and creates neither a labor shortage nor unemployment

in this market, a minimum wage of $2.75 is

if a tax is levied on the sellers of a product, then there will be a

movement up and to the left along the demand curve

if the price of gasoline rises, when the price elasticity of demand likely to be the highest

one year after the price increase

$16 to $40

over which range is the supply curve in the figure the most elastic?

$220 to $430

over which range is the supply curve in this figure the least elastic

in the case of perfectly inelastic demand

quantity demanded stays the same whenever price changes

food and clothing tend to have

small income elasticities because consumers, regardless of their income, choose to buy relatively constant quantities of these goods

between 25 and 50 units

suppose a tax of $5 per unit is imposed on this market. what will be the new equilibrium quantity in this market

$4

the effective price received by the sellers after the tax is imposed is

suppose buyers of vodka are required to send $1.00 to the government for every bottle of vodka they buy. further, suppose this tax causes the effective price received by sellers of vodka to fall by $0.60 per bottle. which of the following statements is correct

the price paid by buyers is $0.40 per bottle more than it was before tax

$8

the price that buyers pay after tax is imposed is

for a particular good, a 10% increase in a price causes a 15% decrease in quantity demanded. which of the following statements is most likely applicable to this good

the relevant time horizon is long

a $2.00 tax levied on the sellers of birdhouses will shift the supply curve

upward exactly by $2.00

1.00

using the midpoint method, at a price of $16, what is the income elasticity of demand when income rises from $5,000 to $10,000

1

using the midpoint method, if the price falls from $60 to $40, the price elasticity of demand is

0.58

using the midpoint method, what is the price elasticity of supply between $100 and $220

0.56

using the midpoint method, when income equals $5,000, what is the price elasticity of demand between $8 and $12

knowing that the demand for wheat is inelastic, if farmers voluntarily did not plant wheat on 10% of their land, then

wheat farmers would experience an increase in their total revenue