econ test 2
if gina sells a shier for $40 and her producer surplus form the sale is $32, her cost must have been
$8
if a 40% change in price results in a 25% change in quantity supplied, then the price elasticity of supply is about
0.63 and supply is inelastic
if the price elasticity of demand for a good is -1.5 then a 3 percent decrease in price results in a
4.5 increase in the quantity demanded
a price ceiling is
a legal maximum on the price at which a good can be sold
it does not matter whether a tax is levied on the buyers or the sellers of a good because
buyers and sellers will share the burden of the tax
the price elasticity of demand measures
buyers responsiveness to a change in the price of a good
holding all other faces constance, when the price of gasoline rises, the number of gallons of gasoline demanded would fall substantially over a ten year period because
buyers tend to be much more sensitive to a change in price when given more time to react
all else equal, what happens to consumer surplus if the price of a good increases
consumer surplus decreases
for a good that is a necessity
demand tends to be inelastic
Denise values a stainless steel dishwasher for her new house at $500. the actual price of the dishwasher is $650. Denise
does not buy the dishwasher, and on her purchase she experience a consumer surplus of $0
suppose the cross-price elasticity of demand between hot dogs and mustard is -2.00. this implies that a 20 percent increase in the price of hot dogs will cause the quantity of mustard purchased to
fall by 40 percent
the greater the price elasticity of demand, the
greater the responsiveness of quantity demanded to a change in price
in general, elasticity is a measure of
how much buyers and sellers respond to changes in market conditions
if an increase in income results in a decrease in the quantity demanded of a good then for that good, the
income elasticity of demand is negative
if the price elasticity of supply is 1.2, and price increased by 5%, quantity supplied would
increase by 6%
if the demand for donuts is elastic, then a decrease in the price of donuts will
increase total revenue of donut sellers
an increase in price causes an increase in total revenue when demand is
inelastic
a result of welfare economics is that the equilibrium price of a product is considered to be the best price because it
maximized the combined welfare of buyers and sellers
goods with many close substitutes tend to have
more elastic demands
a tax is placed on the sellers of a produce, buyers pay
more, and sellers receive less than they did before the tax
suppose goods A and B are substitutes for each other. we would expect the cross-price elasticity between these goods to be
positive
if a change in the price of a good results in no change in total revenue, then
the demand for the good must be elastic
when demand is perfectly inelastic, the demand curve will be
vertical, because buyers purchase the same amount as before whenever the price rises or falls