Econ round 2

A $2.00 tax levied on (collected from) the sellers of mailboxes will shift the supply curve of mailboxes

upward by $2.00.

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

Suppose that when the price of juice is $2 per bottle, firms can sell 4 million bottles. When the price of juice is $3 per bottle, firms can sell 2 million bottles. Which of the following statements is true?

The demand for juice is price elastic, and so an increase in the price of juice will decrease the total revenue of juice producers.

A $2.00 tax levied on (collected from) the buyers of lawnmowers will shift the demand curve

downward by $2.00

Suppose that quantity demanded falls by 30% as a result of a 5% increase in price. The price elasticity of demand for this good is

elastic and equal to 6

Demand is said to be unit elastic if

quantity demanded changes by the same percent as the price.

The price elasticity of demand measures how much

quantity demanded responds to a change in price.

A price floor is

1.a legal minimum on the price at which a good can be sold. 2.often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price floor. 3.a source of inefficiency in a market. ALL OF THE ABOVE

Which of the following could be the price elasticity of demand for a good for which a decrease in price would increase revenue?

2.1

If the price elasticity of demand for a good is 10.0, then a 4 percent increase in price results in a

40 percent decrease in the quantity demanded.

When we move upward and to the left along a linear, downward-sloping demand curve, price elasticity of demand

always becomes more elastic.

When demand is elastic, a decrease in price will cause

an increase in total revenue.

Which of the following is correct?

Rent control is an example of a price ceiling, and the minimum wage is an example of a price floor

On a graph, consumer surplus is represented by the area

below the demand curve and above price.

A price ceiling is binding when it is set

below the equilibrium price, causing a shortage.

Which of the following is likely to have the most price inelastic demand?

cookies

The flatter the demand curve through a given point, the

greater the price elasticity of demand at that point.

If the price of milk rises, when is the price elasticity of demand likely to be the lowest (least elastic)?

immediately after the price increase

The price elasticity of demand for eggs

is computed as the percentage change in quantity demanded of eggs divided by the percentage change in price of eggs.

Consumer surplus

is the amount a consumer is willing to pay minus the amount the consumer actually pays.

A tax imposed on (collected from) the sellers of a good will

lower the effective price received by sellers and lower the equilibrium quantity.

A good will have a more elastic demand,

the greater the availability of close substitutes.

Cross-price elasticity of demand measures how

the price of one good changes in response to a change in the price of another good.

If a price floor is a binding constraint on a market, then

the quantity demanded must exceed the quantity supplied

A key determinant of the price elasticity of supply is the

time horizon.