Econ Exam 2

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Studies of the effects of the minimum wage typically find that a 10 percent increase in the minimum wage depresses teenage employment by about

1 to 3 percent.

If a 15% change in price results in a 20% change in quantity supplied, then the price elasticity of supply is about

1.33, and supply is elastic.

Rent-control laws dictate

A maximum rent that landlords may charge tenants

The price elasticity of demand for bread

All of the above are correct. a. depends, in part, on the availability of close substitutes for bread. b. is computed as the percentage change in quantity demanded of bread divided by the percentage change in price of bread. c. reflects the many economic, social, and psychological forces that influence consumers' tastes for bread.

Suppose good X has a negative income elasticity of demand. This implies that good X is

An inferior good

Suppose good X has a negative income elasticity of demand. This implies that good X is

An inferior good.

A price ceiling will only be binding only if it is set

Below the equilibrium price

The price elasticity of demand measures

Buyers' responsiveness to a change in the price of a good.

The price elasticity of demand for a good measures the willingness of

Consumers to buy less of the good as price rises.

If the government removes a tax on a good, then the price paid by buyers will

Decrease, and the price received by sellers will increase.

The minimum wage

Does not apply to unpaid internships

Suppose the demand for peanuts increases. What will happen to producer surplus in the market for peanuts?

It increases.

As a result of a decrease in price,

New buyers enter the market, increasing consumer surplus

Which of the following expressions represents a cross-price elasticity of demand?

Percentage change in quantity demanded of bread divided by percentage change in price of butter

The price elasticity of demand measures how much

Quantity demanded responds to a change in price.

Cost is a measure of the

Seller's willingness to sell.

The price elasticity of supply measures how responsive

Sellers are to a change in price

When a binding price floor is imposed on a market to benefit sellers,

Some sellers will not be able to sell any amount of the good.

In general, elasticity is a measure of

how much buyers and sellers respond to changes in market conditions.

The minimum wage has its greatest impact on the market for

Teenage labor.

The price elasticity of demand for bread

All of the above are correct. a. is computed as the percentage change in quantity demanded of bread divided by the percentage change in price of bread. b. reflects the many economic, social, and psychological forces that influence consumers' tastes for bread. c. depends, in part, on the availability of close substitutes for bread.

When quantity demanded responds strongly to changes in price, demand is said to be

Elastic.

Which of the following is not an example of a public policy?

Equilibrium laws

Suppose Katie, Kendra, and Kristen each purchase a particular type of cell phone at a price of $80. Katie's willingness to pay was $100, Kendra's willingness to pay was $95, and Kristen's willingness to pay was $80. Which of the following statements is correct?

For the three individuals together, consumer surplus amounts to $35.

The goal of rent control is to

Help the poor by making housing more affordable.

The case of perfectly elastic demand is illustrated by a demand curve that is

Horizontal.

In general, elasticity is a measure of

How much buyers and sellers respond to changes in market conditions.

If the price elasticity of supply is 0.8, and price increased by 5%, quantity supplied would

Increase by 4%.

There are very few if any good substitutes for automotive tires. Therefore, the demand for automotive tires would tend to be

Inelastic

Consumer surplus

Is measured using the demand curve for a product

Consumer surplus

Is measured using the demand curve for a product.

The term tax incidence refers to

The distribution of the tax burden between buyers and sellers

The term tax incidence refers to

The distribution of the tax burden between buyers and sellers.

The price elasticity of supply measures how much

The quantity supplied responds to changes in the price of the good.

Producer surplus directly measures

The well-being of sellers.

The minimum wage does not apply to

Unpaid internships

Consumer surplus is equal to the

Value to buyers - Amount paid by buyers.

The price elasticity of demand for mobile phones

Will be lower if consumers perceive mobile phones to be a necessity.

Suppose Larry, Moe, and Curly are bidding in an auction for a mint-condition video of Charlie Chaplin's first movie. Each has in mind a maximum amount that he will bid. This maximum is called

Willingness to pay

The maximum price that a buyer will pay for a good is called

Willingness to pay.

The marginal seller is the seller who

Would leave the market first if the price were any lower.


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