ECON 1-6

elasticity is the measure of

how much consumers and producers will respond to a change in market conditions

Elasticity is a measure of

how much consumers and producers will respond to a change in market conditions.

the calculated price elasticity of demand

is always a negative number, although many times is reported as an absolute value

The calculated price elasticity of demand:

is always a negative number, although many times is reported as an absolute value.

the mid-point method of calculating elasticity is often used because

it allows us to have a consistent way to estimate the elasticity of demand between two points, regardless of the direction of the movement

The mid-point method of calculating elasticity is often used because:

it allows us to have a consistent way to estimate the elasticity of demand between two points, regardless of the direction of the movement.

You are an advisor to the Egyptian government, which has placed a price ceiling on bread. Unfortunately, many families still cannot buy the bread they need. The price ceiling has not increased consumption of bread because:

it reduces the quantity supplied.

when consumers buying decisions are less sensitive to changes in price, we say that their demand is

less elastic

Consider a tax on cigarettes. The tax incidence will fall more heavily on the side of the market that is:

less elastic, which is likely to be the demand (consumer) side because of the addictive nature of the product.

in the phillipines, rice product is lower than rice consumption, resulting in a need to import rice from other countries. if the phillipine goverment considers a policy of subsidizing rice farmers, the benefits would include

lower prices for consumers, higher prices for producers

Suppose price is 5 percent above equilibrium in two markets: a market for a necessity and a market for a luxury good. All else equal (including supply conditions), you can expect deadweight loss to be greater in the market for the:

luxury good because demand will be more elastic.

The buyers and sellers who trade a particular good or service make up what we call a:

market

the buyers and sellers who trade a particular good or service make up what we call a

market

An economy where private individuals who are guided by the invisible hand make decisions is known as a:

market economy.

the mid-point method of calculating elasticity

measures the percentage change relative to a point midway between the two points

The mid-point method of calculating elasticity:

measures the percentage change relative to a point midway between the two points.

if the phillipine government considers a policy of subsidizing rice farmers, the costs would include

more expense for taxpayers

consider the market for inexpensive hot dogs. you can expect that the income elasticity of demand would be

negative since people buy fewer hot dogs as their income increase

If income increases by 10 percent and the quantity demanded of a good then increases by 5 percent, the good is:

normal and income-inelastic.

You are advising a coffee shop manager who wants to estimate how much sales will change if the price of a latte rises. You tell him that elasticity should be measured in percentage terms rather than in terms of dollars and cups because when using percentages, the elasticity measure is:

not dependent on the measure

the most commonly used measures of elasticity are

price elasticity of demand and price elasticity of supply

The most commonly used measures of elasticity are:

price elasticity of demand and price elasticity of supply.

different measurements of elasticity include

price elasticity of demand, price elasticity of supply

Different measurements of elasticity include:

price elasticity of demand, price elasticity of supply.

The percentage change in the quantity demanded of a good or service when its price changes by one percent is:

price elasticity of demand.

the 4 important characteristics that define competitive market are

standardized good, full information, no transaction costs, participants are price takers

Mathematically, price elasticity of demand is:

the percentage change in the quantity of a good that is demanded in response to a given percentage change in price.

Your boss decides to pair workers in teams and offer bonuses to the most productive team. Your boss might offer team bonuses instead of individual bonuses because:

the pressure of the team will make people work harder.

You have noticed that the price of tickets to your university's basketball games keeps increasing but the supply of tickets remains the same. Supply might be unresponsive to changes in price because:

there a fixed number of stadium seats.

the equilibrium price is often called the market-clearing price because

there is neither excess demand nor excess supply

You need to paint your fence but you really hate this task. You decide to hire the kid next door to do it for you. You would be willing to pay him up to $100, but you start by offering $50, expecting to negotiate. To your great surprise, he accepts your $50 offer. When you tell your friend about the great deal you got, she is shocked that you would take advantage of someone. To assure your friend that you did not cheat the kid next door, you tell her that:

with voluntary exchange both parties are better off, and are satisfied when accepting the exchange price.

If supply and demand analysis is a measure of how, then elasticity is a measure of:

how much

if supply and demand analysis is a measure of how, then elasticity is a measure of

how much

demand decreases, supply decreases

EQ price cannot be predicted, eq quantity decrease

demand increases, supply increases

EQ price cannot be predicted, equilibrium quantity increase

supply increases, demand remains constant

EQ price decreases, EQ quantity increases

demand increases, supply remains constant

EQ price increases, EQ quantity increases

supply decreases, demand remains constant

EQ price increases, eq quantity decreases

Could one of you have an comparative advantage at baking both items?

No, because each person can have a comparative advantage in only one task.

When the price of gasoline was very high in the summer of 2008, several U.S. presidential candidates proposed implementing a national price ceiling to keep fuel affordable. How would this policy have affected producer and consumer surplus?

Producer surplus would fall, and individual consumer surplus may increase or decrease.

You are in the market for a new couch and found two advertisements for the kind of couch you want to buy. Seller One notes in her ad that she is selling because she is moving to a smaller apartment and the couch won't fit in the new space. Seller Two says he is selling because the couch doesn't match his other furniture. You will probably get a better deal from:

Seller One because the couch must be removed from her home.

price elasticity of demand

The percentage change in the quantity demanded of a good or service when its price changes by 1 percent

Suppose there has been a long-standing price ceiling on housing in your city. Recently, population has declined and demand for housing has decreased. The decrease in demand could cause the efficiency of the price ceiling to:

become non-binding so there would be no shortage or deadweight loss.

This policy would cause total surplus to:

decrease

demand decreases, supply remains constant

eq PRICE DECREASE, EQ quantity decrease

demand decreases, supply increases

eq price decrease, eq quantity cannot be predicted

demand increases, supply decreases

eq price increase, eq quantity cannot be predicted

A state facing a budget shortfall decides to tax soft drinks. You are a budget analyst for the state. You would expect to collect more tax revenue in the:

first year because elasticity is larger over a longer time frame. In the second year fewer trades will occur than occurred in the first year.

a standardized good or service is one

for which any two units of it have the same features and are interchangeable

A perfectly competitive market is one in which:

fully informed, price-taking buyers and sellers easily trade a standardized good or service.

Suppose the government offers a subsidy to laptop sellers. Say whether each group of people gains or loses from this policy. laptop buyers laptop sellers desktop comp sellers d/c consumers

gain, gain, lose, gain

you've been put in charge of a bake sale for a local charity at which you are planning to sell cookies and cupcakes. Suppose another volunteer is going to help you bake. If one of you has a comparative advantage at baking cookies it means that one of you:

give up fewer cupcakes for each cookie you bake.

A subsidy will increase consumer and producer surplus in a market and will increase the quantity of trades. A subsidy (such as a subsidy for producing corn in the United States) can be considered inefficient because a subsidy results in a quantity:

higher than the market equilibrium quantity where the cost of supplying that unit exceeds the willingness to pay.

You have been hired by the government of Kenya, which produces a lot of coffee, to examine the supply of gourmet coffee beans. Suppose you discover that the price elasticity of supply is 0.85. When you share your information with the Kenyan government, you explain that a price elasticity of supply is 0.85 means that:

if the price rises by 1%, the quantity supplied will increase by .85%.

Suppose the government imposes a price ceiling on gasoline. One month after the price ceiling, there is a shortage of gasoline, but it is much smaller than critics of the policy had warned. The critics' estimates might still be correct because over time the shortage of gasoline is likely to:

increase as elasticity in the market increases and consumers respond more.

Consider the market for plane tickets to Hawaii. A bad winter in the mainland United States increases demand for tropical vacations, shifting the demand curve to the right. The supply curve stays constant. Total surplus will:

increase because both consumer and producer surplus increase.

Suppose Colombia maintains a price floor for coffee beans. If the price floor encourages new growers to enter the market and produce coffee, the size of the deadweight loss would:

increase because the supply curve would shift right, and the equilibrium price would fall even lower than the original equilibrium price.

Certain skilled labor, such as hair cutting, requires licensing or certification. This is costly and takes a long time to acquire. If this licensing requirement were removed, the price elasticity of supply for haircuts would:

increase, or become more elastic because more people could enter the occupation.

Many states tax cigarette purchases. Suppose that smokers are unhappy about paying the extra charge for their cigarettes. If the state imposes the tax on the stores that sell the cigarettes rather than on smokers, it will:

not make any difference to smokers because the tax incidence or burden of the tax is a function of the relative elasticities of supply and demand.

A good economic model is more likely to address a:

positive statement because a good model can can be tested with evidence.

At Zooey's elementary school, children are not allowed to trade lunches or components of their lunches with other students. Lunchroom monitors watch closely and strictly enforce this policy. If Zooey prepares an argument about the inefficiency of this policy to her principal, she can say that the school policy is:

preventing a market that would generate mutually beneficial trades.

Suppose an economic boom drives up wages for the sales representatives who work for cell phone companies. This will cause the:

supply of cell phones to decrease; the price of cell phones would increase and the quantity of cell phones traded would fall.

Which buyers and sellers are included in the market under consideration depends on:

the context.

Suppose the United States maintains a price floor for spinach. This policy might decrease revenues for spinach farmers if the:

the demand for spinach is elastic

economists use the percentage change in quantity rather than the absolute change in quantity because

the measured elasticity is the same regardless of the unit of measurement for quantity

Economists use the percentage change in quantity rather than the absolute change in quantity because:

the measured elasticity is the same regardless of the unit of measurement for quantity.

mathematically, price elasticity of demand is

the percentage change in the quantity of a good that is demanded in response to a given percentage change in price