ECON 2300

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the term tax incidence refers to

the distribution of the tax burden between buyers and sellers

todays demand curve for gasoline could shift in response to a change in

the expected future price of gasoline

other things equal when the price of a good rises the quantity demanded of the good falls and when the price falls the quantity demanded rises. this relationship between price and quantity demanded is referred to as

the law of demand

a movement along the supply curve might be caused by a change in

the price of the good or service that is being supplied

income elasticity of demand measures how

the quantity demanded changes as consumer income changes

cross price elasticity of demand measures how

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

if the minimum wage exceeds the equilibrium wage then

the quantity supplied of labor will exceed the quantity demanded

which of the following is not a determinant of the price elasticity of demand for a good

the steepness or flatness of the supply curve for the good

the demand for a good or service is determined by

those who buy the good or service

which of the following could be the cross price elasticity of demand for two goods that are complements

-1.3

how much tax revenue does this tax generate for the government

150

if the horizontal line on the graph represents a price floor, then the price floor is

binding and creates a surplus of 90 units of the good

economics deals primarily with the concept of

scarcity

the smaller the price of elasticity of demand the

steeper the demand curve will be through a given point

an example of a price floor is

the minimum wage

using the midpoint method, if the price falls from 80 to 60, the absolute value of the price elasticity of demand is

2.33

equilibrium price and quantity are respectively

25 and 400 units

when the price rises from p1 to p2 which area represents the increase in producer surplus to existing producers

ABGD

all else equal what happens to consumer surplus if the price of a good increases

consumer surplus decreases

if goods A and B are complements, then an increase in the price of good A will result in

less of good B being sold

at price of 35, there would be a

surplus of 400 units

the opportunity cost of an item is

what you give up to get that item

buyers of a good bear the larger share of the tax burden when the

(i) only supply is more elastic than the demand for the product

suppose the price of potato chips decreases from 1.45 to 1.25 and as a result the quantity of potato chips demanded increases from 2,000 to 2,200. using the midpoint method the price elasticity of demand for potato chips in the given price range is

0.64

suppose the price of potato chips decreases from 1.45 to 1.25 and, as a result, the quantity of potato chips demanded increases from 2,000 to 2,200. using the midpoint method, the price of elasticity for potato chips in the given price range is

0.64

between point A and B price elasticity of demand is equal to

1.5

between point A and point B, price elasticity of demand is equal to

1.5

the effective price that sellers receive after the tax is imposed is

10

the price that buyers pay after the tax is imposed is

12

the vertical distance between points A and B represents the tax in the market. the amount of the tax per unit is

14

if the price elasticity of supply is 1.5 and a price increase led to a 3% increase in quantity supplied then the price increase is about

2.0%

a manufactured produces 400 units when the market price of 10 per unit and produces 600 units when the market price is 12 per unit. using the midpoint method for this range of prices the price elasticity of supply is about

2.2

a manufacturer produces 400 units when the market price of 10 per unit and produces 600 units when the market price in 12 per unit. using the midpoint method, for this range of prices, the price elasticity of supply is about

2.2

the vertical distance between points A and B represents the tax in the market. the price that buyers pay after the tax is imposed

24

if the price of the good is 150 then consumer surplus amounts to

250

bill created a new software program he is willing to sell for 200. he sells his first copy and enjoys a producer surplus of 150. what is the price paid for the software

350

what is the amount of the tax per unit

4

a price ceiling set at

4 will be binding and will result in a shortage of 6 units

the equilibrium price and quantity respectively are

6 and 30 units

which area represents the increase in produce surplus when the price rises from p1 to p2

AHGB

when the price is p1 producer surplus is

C

which demand curve is perfectly inelastic

a

which of the following changes would not shift the supply curve for a good or service

a change in the price of the good or service

when demand is inelastic a decrease in price will cause

a decrease in total revenue

a price ceiling is

a legal maximum on the price at which a good can be sold

necessities such as food and clothing tend to have

a low price of demand and low income elasticities of demand

a price floor is only binding if it is set

above the equilibrium price

a price floor will be binding only if it is set

above the equilibrium price

sellers total revenue would increase if the price

all of the above are correct

the current price of neckties is 30 but the equilibrium price of neckties is 25. as a result

all of the above are correct

laissez faire is a french expression which literally means

allow them to do

the movement from point A to point B on the graph shows

an increase in quantity demanded

when demand is inelastic, an increase in price will cause

an increase in total revenue

consumer surplus in a market can be represented by the

area below the demand curve and above the price

in this market, a minimum wage of 7.25 is

binding and creates unemployment

if consumers view cappuccinos and lattes as substitutes what would happen to the equilibrium price and quantity of lattes if the price of cappuccinos rises

both the equilibrium price and quantity would increase

which of the following statements is correct

buyer determine demand and sellers determine supply

the price elasticity of demand measures

buyers responsiveness to a change in the price of a good

the price of elasticity of demand measures

buyers responsiveness to a change in the price of a good

a legal maximum on the price at which a good can be sold is called a price

ceiling

last year, shelley bought 6 pairs of designer jeans when her income was 40,00. this year, her income is 50,000, and she purchased 10 pairs of designer jeans, holding other factors constant, it follows that shelley

considers designer jeans to be a normal good

the government has just passed a law requiring that all residents earn the same annual income regardless of work effort. this law is likely to

decrease efficient but increase quality

an increase in the price of a good will

decrease quantity demanded

if the demand for textbooks is inelastic then a decrease in the price of textbooks will

decrease total revenue of textbook sellers

two goods are substitutes when a decrease in the price of one good

decreases the demand for the other good

a tax on buyers will shift the

demand curve downward by the amount of the tax

ryan says that he would buy one cup of coffee every day regardless of the price. if he is telling the truth, ryans

demand for coffee is perfectly inelastic

the discovery of a new hybrid wheat would increase the supply of wheat. as a result wheat farmers would realize and increase in total revenue if the

demand for wheat is elastic

the discovery of a new hybrid wheat would increase the supply of wheat. as a result, wheat farmers would realize an increase in total revenue if the

demand for wheat is elastic

which of the following events must cause equilibrium price to rise

demand increases and supply decrease

tax incidence

depends on the elasticities of supply and demand

when the price of hot dogs changes the demand curve for hot dogs

does not shift because the price of hot dogs is measured on the vertical axis of the graph

which supply schedules obey the law of supply

firm B's and firm D's only

pizza is a normal good if the demand

for pizza rises when income rises

pizza is normal good if the demand

for pizza rises when income rises

the flatter the demand curve through a given point the

greater the price elasticity of demand at that point

a consumers willingness to pay directly measures

how much a buyer values a good

a binding price floor i causes a surplus. ii causes a shortage. iii is set at a price above the equilibrium price. iv is set at a price below the equilibrium price

i and ii only

if the demand for donuts is elastic then a decrease in the price of donuts will

increase total revenue of donut sellers

two goods are complements when a decrease in the price of one good

increases the demand for the other good

the difference between slop and elasticity is that slope

is a ratio of two changes, and elasticity is a ratio of two percentage changes

when a surplus exists in a market sellers

lower price which increases quantity demanded and decreases quantity supplied until the surplus is eliminated

a rational maker takes an action only if the

marginal benefit is greater than the marginal cost

a competitive market is a market in which

no individual buyer or seller has any significant impact on the market price

in the market, a minimum wage of 2.75 is

nonbinding and creates neither a labor shortage nor unemployment

in this market, a minimum wage of 2.75 is

nonbinding and creates neither a labor shortage nor unemployment

an increase in which of the following would shift the supply curve for gasoline to the right

number of producers of gasoline

if the demand curve shifts from D to D' then

people are willing to buy less of the good than before at each possible price

the phrase no such thing as a free lunch means

people must face tradeoffs

economists compute the price elasticity of demand as the

percentage change in quantity divided by the percentage change in price

if two goods are substitutes, their cross price elasticity will be

positive

which of the following is not held constant in a demand schedule

price

a perfectly inelastic demand implies that buyers

purchase the same amount as before when the price rises or falls

the price elasticity of demand measures how much

quantity demanded responds to a change in a price

the market demand curve

represents the sum of the quantities demanded by all the buyers at each price of the good

the price elasticity of supply measures how responsive

sellers are to a change in price

cost is a measure of the

sellers willingness to sell

if the price were 4 a

shortage of 25 units would exist and price would tend to rise

the price ceiling causes a

shortage of 85 units

efficiency means that

society is getting the maximum benefits from its scarce resources


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