Econ Final Review
Ziva is an organic lettuce famer, but she also spends part of her day as a professional organizing consultant. As a consultant, Ziva helps people organize their houses. Due to the popularity of her home-organization services, Farmer Ziva has more clients requesting her services than she has time to help if she maintains her farming business. Farmer Ziva charges $25 an hour for her home-organization services. One spring day, Ziva spends 10 hours in her fields planting S130 worth of seeds on her farm. She expects that the seeds she planted will yield $300 worth of lettuce.
$-80
Celine buys a new MP3 player for $90. She receives consumer surplus of $15 on her purchase if her willingness to pay
$105
Kelly is willing to pay $5.20 for a gallon of gasoline. The price of gasoline at her local gas station is $3.80. If she purchases ten gallons of gasoline, then Kelly's consumer surplus is
$14
Marcus sells 300 candy bars at $0.50 each. His total costs are $125. His profits are
$25.
Christine is an artist who creates custom cookie jars. Her annual revenue from selling the cookie jars is $90,000. The annual explicit costs of the materials used to make the cookie jars are $54,000. Refer to Scenario 13-13. Christine used $5,000 from her personal savings account to buy pottery tools for her business. The savings account paid 1% annual interest. Christine could earn $6,000 per year as a tax preparer. What is the annual accounting profit of her cookie jar business?
$36.000
Suppose Lauren, Leslie and Lydia all purchase bulletin boards for their rooms for $15 each. Lauren's willingness to pay was $35, Leslie's willingness to pay was $25, and Lydia's willingness to pay was $30. Total consumer surplus for these three would be
$45
Scenario 13-16 Barney builds custom wooden birdhouses. He can make 150 birdhouses per month and sell them for $50 each. His average total cost is $30 per birdhouse. Refer to Scenario 13-16. Barney is considering hiring his best friend Fred to work for him. Fred can build 125 birdhouses per month. If Barney hires Fred, what will be the monthly marginal product?
125 birdhouses
Consumer surplus is
All of the above are correct.
Most economists prefer corrective taxes to regulation as a way to correct the problem of pollution because
All of the above are correct.
Which of the following statements about costs is correct?
As the quantity of output increases, marginal cost eventually rises.
Which of the following is not a property of a firm's cost curves?
Average total cost will cross marginal cost at the minimum of marginal cost.
Which of the following is the most likely explanation for the imposition of a price ceiling on the market for milk?
Buyers of milk, recognizing that the price ceiling is good for them. have pressured policymakers into imposing the price ceiling.
Regulations to reduce pollution A. allow firms with the lowest cost to reduce pollution by more than those with highest costs. B. are a better solution for the environment than a corrective tax. C. are a more costly solution to society than a corrective tax. D. cause pollution levels to drop below the regulated amount.
C
the "invisible hand" is
Concept created by Adam Smith to describe the virtues of free markets
Which of the following statements is not correct about a market in equilibrium?
Consumer surplus will be equal to producer surplus.
Altering incentives so that people take account of the external effects of their actions a. is called internalizing the externality. b. can be done by imposing a corrective tax. c. is the role of government in markets with externalities. d. all of the above.
D
which of the following is a way to address an externality problem? a. command and control solution b. corrective tax c. corrective subsidy d. all of the above.
D
which of the following is an example of an externality? A. cigarette smoke that permeates an entire restaurant B. a flu shot that prevents a student from transmitting the virus to her roommate C. a beautiful flower garden outside of the local post office D. All of the above
D
which of the following is not correct? a. A patent is a way for the government to encourage the production of a good with technology spillovers. b. A tax is a way for the government to reduce the production of a good with a negative externality. c. A tax that accurately reflects social costs produces the socially optimal outcome. d. Government policies cannot improve upon private market outcomes.
D
who gets scarce resources in a market economy a. the government b. whoever the government decided gets them c. whoever wants them d. whoever is willing and able to pay the price
D
Connie can clean windows in large office buildings at a cost of $1 per window. The market price for window-cleaning services is $3 per window. If Connie cleans 100 windows, her producer surplus is $100.
False
Consumer surplus can be measured as the area between the demand curve and the supply curve.
False
If the marginal cost of producing the fifth unit of output is higher than the marginal cost of producing the fourth unit of output, then at five units of output, average total cost must be rising.
False
Joel has a 1966 Mustang, which he sells to Susie, an avid car collector. Susie is pleased since she paid S8.000 for the car but would have been willing to pay $11,000 for the car. Susie's consumer surplus is $2,000.
False
The marginal-cost curve intersects the average-total-cost curve at the output level where average fixed costs are zero.
False
Suppose the government has imposed a price floor on the market for soybeans. Which of the following events could transform the price floor from one that is not binding into one that is binding?
Farmers use improved, draught-resistant seeds, which lowers the cost of growing soybeans.
Which of the following would least likely result of a binding price ceiling impose on the market for rental cars
Free gasoline given to the people as an incentive to rent a car
Producer surplus equals the
O amount received by sellers minus the cost to sellers.
suppose the equilibrium price of a tube of toothpaste is $2, and the government imposes a price floor of $3 per tube. As a result of the price floor, the
Quantity demanded of toothpaste decreases, and the quantity of toothpaste that firms want to supply increases.
non-binding price ceiling
Set above the equilibrium price
Which of the following is not correct?
The minimum wvage is binding for workers with high skills and much experience.
producers have little incentive to produce a public good because
There is a free-rider problem
Because of the greater flexibility that firms have in the long run, all short-run cost curves lie on or above the long-run curve.
True
Despite the appealing logic of the Coase theorem, private actors often fail to resolve on their own the problems caused by externalities.
True
Even though participants in the economy are motivated by self-interest, the "invisible hand" of the marketplace guides this self-interest into promoting general economic well-being.
True
Government can be used to solve externality problems that are too costly for private parties to solve.
True
If a price ceiling of $1.50 per gallon is imposed on gasoline, and the market equilibrium price is $2, then the price ceiling a binding constraint the market.
True
If the government removes a binding price ceiling in a market, then the producer surplus in that market will increase.
True
Movements of workers from country to country can cause shifts in the labor supply curves for both countries.
True
The government can internalize externalities by taxing goods that have negative externalities and subsidizing goods that have positive externalities.
True
The quantity available of one factor of production can affect the marginal product of other factors.
True
The shape of the marginal cost curve tells a producer something about the marginal product of her workers.
True
The term tax incidence refers to have the burden of tax is distributed among the various people who make up the economy
True
When a competitive firm hires labor up to the point at which the value of the marginal product of labor equals the wage, it also produces up to the point at which the price of output equals average variable
True
Workers with high skills and much experience are not typically affected by the minimum wage.
True
Which of the following would not be considered a negative externality?
You have an adverse reaction to a medication your doctor prescribed for you.
The "invisible hand" is
a concept developed by Adam Smith to describe the virtues of free markets.
The best remedy for market failure is often
a market-based solution.
An outcome that can result from either a price ceiling or a price floor is
a nonbinding price floor
suppose the equilibrium price of a tube of toothpaste is $2, and the government imposes a price floor of $3 per tube. As a result of the price floor
all of the above
the mayor of workerville proposes a local payroll tax to fund a new water park for the city. the mayor proposes to collect half the tax from workers and half the tax from firms. workers will bear
all of the above are possible
Which of the following is a way to address an externality problem?
all of the above.
If an allocation of resources is efficient, then
all potential gains from trade among buyers are sellers are being realized.
when a binding price floor is imposed on a market to benefit sellers
all sellers benefit
500 units of good x are currently bought and sold. The marginal buyer is willing to pay $40 for the 500th unit, and the cost to the marginal seller is $35 for the 500th unit. We know that
all the above
consumer surplus is
all the above
in a market economy supple and demand are important because they
all the above
suppose buyers of vodka are required to send $5.00 to the government for every bottle of vodka they buy. Further, suppose this tax causes the effective price received by sellers of vodka to fall $3 per bottle. Which of the following statements is correct?
all the above are correct
the opportunity cost of obtaining more of one good is shown on the production possibilities frontier as the
amount of the other good that must be given up
product surplus equals the
amount received by sellers minus the cost to sellers
The amount of money that a wheat farmer could have earned if he had planted barley instead of wheat is
an implicit cost.
Which of the following statements is correct? a. gasoline taxes are an EPA Regulation b. Gasoline taxes are higher in many European countries than in the United States. c. gasoline taxes are a command-and-control policy d. gasoline taxes contribute to global warming
b
Which types of models are built with assumptions? a. economic models, but not models in other disciplines such as physics and biology b. economic models as well as models in other disciplines such as physics and biology c. models that are built for teaching purposes but not for research purposes d. bad models
b
Suppose that the demand for picture frames is highly inelastic, and the supply of picture frames is highly elastic. A tax of $1 per frame levied on picture frames will increase the price paid by buyers of picture frames by
between $0.50 and $1.
which of the following statements is correct about a market in which pollution is emitted
both corrective taxes and pollution permits internalize the externality of pollution
if cappuccinos and lattes are seen as substitutes, what would happen to the equilibrium price and quantity of lattes if the price of cappuccinos falls
both equilibrium price and quantity would decrease
if consumers view cappuccinos and lattes as substitutes, what would happen to the equilibrium price and quantity of the lattes if the price of cappuccinos falls
both equilibrium price and quantity would decrease
If scientists discover that steamed milk, which is used to make lattés, prevents heart attacks, what would happen to the equilibrium price and quantity of lattés?
both equilibrium price and quantity would increase
if consumers view cappuccinos and lattes as substitutes, what would happen to the equilibrium price and quantity of the lattes if the price of cappuccinos rises
both equilibrium price and quantity would increase
a circular-flow model and production possibilities frontier are similar in that
both make use of assumptions
in economics, capital refers to
buildings and machines used in the production process
when the price of a good is lower than the equilibrium price
buyers desire to purchase more than is produced
An economic theory about international trade that is based on the assumption that there are only two countries trading two goods
can be useful in helping economists understand the complex world of international trade involving many countries and many goods
when a market is characterized by an externality, the government
can correct the market failure in the case of both positive and negative externalities by inducing market participants to internalize the externality.
A nonbinding price ceiling
causes a shortage
Marginal cost is equal to
change in TC/change in Q
If a consumer places a value of $15 on a particular good and if the price of the good is $17, then the
consumer does not purchase the good.
The difference between social cost and private cost is a measure of the
cost of an externality
a positive economic statement such as pollution taxes decrease the quantity of pollution firms generate would require
data but not values to be evaluated
Equilibrium quantity must increase when demand
decreases and supply does not change, when demand does not change and supply decreases, and when both demand and supply decrease
when the tax is placed on the sellers of cell phone, the size of the cell phone market
decreases, but the price paid by buyers increases
when a tax is placed on the buyers of tennis racquets, the size of the tennis racquet market
decreases, but the price paid by buyers increases.
In building economic models, economists often omit
details
Suppose the government imposes a 50-cent tax on the sellers of packets of chewing gum. The tax would
discourage market activity.
if a tax is levied on the buyers of a product, then there will be a
downward shift of the demand curve
Advocates of the minimum wage
emphasize the low annual incomes of those who work for the minimum wage
which of the following is not an example of a public policy?
equilibrium laws
Suppose the number of buyers in a market increases and a technological advancement occurs also. What would we expect to happen in the market?
equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous
the coase theorem asserts that the private market will always solve the problem of externalities and allocate resources efficiently
even if the inital distribution of legal rights is skewed in favor of some private parties over others
When a payroll tax is enacted, the wage received by workers
falls, and the wages paid by firms rises.
All buyers benefit from a binding price ceiling. True False
false
Baseballs and Baseball bats are substitute goods? (T/F)
false
Organizers of an outdoor concert in a park surrounded by residential neighborhoods are likely to consider the noise and traffic cost to residential neighborhoods when they assess the financial viability of the concert venture.
false
Price cannot fall so low that some sellers choose to supply a quantity of zero.
false
Sellers as a group determine the demand for a product, and buyers as a group determine the supply of a product.
false
When a seller expects the price of its product to decrease in the future, the seller's supply curve shifts left now.
false
a decrease in the price of creamer will increase equilibrium price and decrease quantity demanded in the market for coffee
false
a decrease in the price of creamer will increase the equilibrium price and decrease the equilibrium quantity in the market for coffee
false
a movement upward and to the left along a given demand curve is called a decrease in demand
false
a price ceiling is a legal minimum on the price at which a good or service can be sold
false
a price ceiling set below the equilibrium price is binding
false
all else equal, an increase in demand will always increase consumer surplus
false
an increase in price increases consumer surplus
false
an increase in the market price of a product and an increase in the number of sellers in the market affect the supply curve in the same way
false
if the united states legally allowed for a market in transplant organs, it is estimated that one kidney would sell for at least $100,000
false
individual supply curves are summed vertically to obtain the market supply curve
false
public service announcements, mandatory health warnings on cigarette packages, and the prohibition of cigarette advertising on television are all policies aimed at shifting demand curve for cigarettes to the rightq
false
rent subsidies and wage subsidies are better than price controls at helping the poor because they have no costs associated with them
false
the concept of external benefit is associated with a negative externality, but not with a positive externality
false
the law of demand states that, other things equal, when the price of a good rises, the quantity demanded of the good rises, and when the price falls the quantity demanded falls
false
the law of demand states that, other things equal, when the price of a good rises, the quantity demanded of the good rises, and when the price of the good falls, the quantity demanded falls
false
the market demand curve shows how the total quantity demanded of a good varies as the income of buyers varies, while all the other factors that affect how much consumers want to buy are held constant
false
two loops in the circular flow diagram represent
flow of inputs and outputs and the flow of dollars
economists make assumptions to
focus their thinking on the problem at hand
which of the following key figures are omitted from the simple circular flow model
govt
in the circular flow diagram, markets for goods and services
households and firms are both sellers
the coase theorem states that
in the absence of transaction costs, private parties can solve the problem of externalities on their own
Just like models constructed in other areas of science, economic models
incorporate assumptions that contradict reality
The marginal product of labor is equal to the
increase in output obtained from a one unit increase in labor.
a decrease in the price of a good will
increase in quantity demanded
if the government removes a binding price ceiling from a market, then the price paid by buyers will
increase, and the quantity sold in the market will increase
Economies of scale arise when
individuals in a society are self-sufficient.
As a rationing mechanism, discrimination according to seller bias is
inefficient and potentially unfair
in the circular flow diagram which of the following represents a payment for a factor of production
interest
Patents do not
internalize externalities.
a statement describing how the world should be
is a normative statement
Tragedy of the Commons
is eliminated when property rights are assigned to individuals.
Consumer surplus
is the amount a consumer is willing to pay minus the amount the consumer actually pays.
suppose that the demand for peaches decreases. What will happen to producer surplus in the market for peaches?
it decreases
Economists face an obstacle that many other scientists do not face. What is that obstacle?
it is often impractical to perform experiments in economics
A nonbinding 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.
iv
in the circular flow diagram
labor flows from households to firms
You know an economist has crossed the line from scientist to policy adviser when he or she
makes positive statements
most economists prefer corrective taxes to regulation as a way to correct the problem of pollution because
market based solutions is less costly to society
A result of welfare economics is that the equilibrium price of a product is considered to be the best price because it
maximizes the combined welfare of buyers and sellers.
Suppose televisions are a normal good and buyers of televisions experience a decrease in income. As a result, consumer surplus in the television market
may increase, decrease, or remain unchanged.
the belief that tobacco is a gateway drug is consistent with
most of the available evidence
corrective taxes are unlike most other taxes because they
move the allocation of resources closer to the social optimum
When externalities exist, buyers and sellers
neglect the external effects of their actions, and the market equilibrium is not efficient.
Inefficiency exists in a market when a good is
not being consumed by buyers who value it most highly.
Inefficiency exists in an economy when a good is
not being consumed by buyers who value it most highly.
inefficiency exists in the market when a good is
not being consumed by buyers who value it most highly.
Reaching an efficient bargain is difficult when the
number of interested parties is large
an increase of which of the following would shift the supply curve for gasoline to the right
number of producers of gasoline
a rain barrel is a container that captures and stores rainwater for landscape and garden use during dry periods. Rain barrels provide an external benefit to the community through water conservation. What can the government do to equate the equilibrium quantity of rain barrels and the socially optimal quantity of rain barrels?
offer a subsidy on rain barrels that is equal to the per-unit externality
University researchers create a positive externality because what they discover in their research labs can easily be learned by others who haven't contributed to the research costs. What could the federal government do to equate the equilibrium quantity of university research and the socially optimal quantity of university research produced?
offer grants to university researchers
Assume that your roommate is very messy. According to campus policy, you have a right to live in an uncluttered apartment. Suppose she gets an $80 benefit from being messy but imposes a $60 cost on you. The Coase theorem would suggest that an efficient solution would be for your roommate to
pay you at least $60 but less than $80 to live with the clutter.
the difference between economists speaking as scientists or policy advisors boil down to the difference between
positive and normative statements
prices when the quantity of money rises rapidly is an example of a
positive economic statement
Research into new technologies provides a
positive externality, and too few resources are devoted to research as a result
in principle we can confirm or refute
positive statements by examining evidence
positive statements are not
prescriptive
normative statements are
prescriptive, whereas positive statements are descriptive.
If a nonbinding price floor is imposed on a market, then a. the quantity sold in the market will decrease. b. the quantity sold in the market will stay the same. c. the price in the market will increase. d. the price in the market will decrease.
price sold will stay the same
what will happen to the equilibrium price of new textbooks if more students attend college, paper becomes cheaper, textbooks authors accept lower royalties, and fewer used textbooks are sold?
price will be ambiguous
what would happen to the equilibrium price and quantity of coffee if the wages of coffee bean pickers fell and the price of tea fell
price would fall and effect on quantity is ambiguous
what would happen to the equilibrium price and quantity of coffee if the wages of the coffee-bean pickers fell and the price of tea fell
price would fall and quantity would be ambiguous
Stewart is a lobsterman. His traps are
private goods and the lobster he catches are common resources
each of the following is a determinant of demand except
production technology
in the circular flow diagram, which of the following items does not flow from households to firms
profit
suppose the equilibrium price of a tube of toothpaste is $2, and the government imposes a price floor of $3 per tube. as a result of the price floor, the
quantity demanded of toothpaste decreases, and the quantity of toothpaste that firms want to supply increases
which of the following statements applies to economics, as well as to other sciences such as physics
real world observations often lead to theories
In Singapore, littering fines are strictly enforced. This is an example of a policy that
relies on incentives to reduce the pollution externality.
Producer surplus is
represented on a graph by the area below the demand curve and above the supply curve.
Economists believe that production possibilities frontiers are often bowed because
resources are not completely adaptable
Holding the nonprice determinants of supply constant, a change in price would
result in a movement along a stationary demand curve
positive externalities
result in smaller than efficient equilibrium quantity
a tax on the buyers of the cameras encourages
sellers to supply a smaller quantity at every price.
if a tax is imposed on a market with inelastic demand and elastic supply, then
sellers will bear most of the burden of the tax
in the case of a technology spillover, internalizing a positive externality will cause the supply curve of an industry to
shift to the right
if a tax is levied on the buyers of a product, the the supply curve will
shifts up
Economic models are
simplifications of reality, and in this respect economic models are no different from other scientific models
After a binding price floor becomes effective, a
smaller quantity of the good is bought and sold.
private markets fail to reach a socially optimal equilibrium when negative externalities are present because
social costs exceed private costs at the private market solution.
A tax on sellers will shift the
supply curve upward by the amount of the tax
a tax on sellers will shift the
supply curve upward by the amount of the tax
Wheat is the main input in the production of flour. If the price of wheat decreases, then we would expect the
supply of flour to increase
A binding price floor causes
surplus
consumer surplus is
the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it
economists who are primarily responsible for advising congress on economic matters work in which agency
the congressional budget office
A shortage exists in a market if
the current price is below its equilibrium price.
An externality exists whenever
the economy cannot benefit from government intervention.
a production possibilities frontier shifts outwards when
the economy experiences economic growth
A microeconomist — as opposed to a macroeconomist — might study
the effect of new regulations on production in the pulp and paper industry
If macaroni and cheese is an inferior good, what would happen to the equilibrium price and quantity of macaroni and cheese if consumers' incomes rise?
the equilibrium price would decrease, and the equilibrium quantity would rise
suppose that flu shots create a positive externality equal to $8 per shot. further suppose that the government offers a $11-per-shot subsidy to producers. what is the relationship between the equilibrium quantity and the socially optimal quantity of the flu shots produced?
the equilibrium quantity is greater than the socially optimal quantity
Today's supply curve for gasoline could shift in response to a change in
the expected future price of gasoline
Today's supply curve for iPods could shift in response to a change in
the expected future price of ipods
which of the following statements is an example of a normative, as opposed to positive statement
the federal govt responses to the most recent recession were insufficient
which of the following statements is an example of a normative, as opposed to positive statement
the federal govt should decrease unemployment benefits to stimulate the economy out of the recession
The bowed shape of the production possibilities frontier can be explained by the fact that
the opportunity cost one good in terms of the other depends on how much of each hood the economy is producing
Along the vertical axis of the production function we typically measure
the quantity of output.
If a nonbinding price ceiling is imposed on a market, then the
the quantity sold in the market will stay the same.
if the current allocation of resources in the market for hammers is inefficient, then it must be the case that
the sum of consumer surplus and producer surplus could be increased by moving to a different allocation of resources
An externality is
the uncompensated impact of one person's actions on the well- being of a bystander.
A simultaneous increase in both the demand for MP3 players and the supply of MP3 players would imply that
the value of MP3 players to consumers has increased, and the cost of producing MP3 players has decreased
a simultaneous increase in both the demand for MP3 players and the supply of MP3 players would imply that
the value of MP3 players to consumers has increased, and the cost of producing MP3 players has decreased.
the demand for a good or service is determined by
those who buy the good or service
Which of the following can be added to profit to obtain total revenue?
total cost
The amount of money that a firm receives from the sale of its output is called
total revenue.
Economists typically measure efficiency using
total surplus.
which of the following is an example of using the scientific method with a natural experiment
tracking the price of oil when a war in the middle east interrupts the flow of crude oil
If a higher price means a greater quantity supplied, then the supply curve slopes upward.
true
If something happens to alter the quantity supplied at any given price, then the demand curve shifts
true
If the demand curve is very elastic and the supply curve is very inelastic in a market, then the sellers will bear a greater burden of a tax impound on the market, even if the tax is imposed on the buyers
true
Price will rise to eliminate a shortage
true
When a binding price floor is imposed on a market for a good, some people who want to buy the good cannot do so
true
When a seller expects the price of its product to decrease in the future, the seller's supply curve shifts left now. a. TRUE b. FALSE
true
Who bears the majority of a tax burden depends on whether the tax is placed on the buyers or the sellers
true
a binding minimum wage creates unemployment
true
a congestion toll imposed on a highway driver to force the driver to take into account the increase in travel time she imposes on all other drivers is an example of internalizing the externality
true
a decrease in supply will cause an increase in price which will decrease the quantity demanded
true
a decrease in the price of peanut butter will increase both the equilibrium price and quantity in the market for jelly
true
a decrease in the price of sugar will shift the supply curve for cookies to the right
true
a yard sale is an example of market
true
an example of the tragedy of commons is litter in the picnic area of a local park
true
an increase in the demand of a substitute good will shift demand curve to the right
true
an increase in the price of a substitute good will shift the demand curve for a good to the right
true
an increase in the price of blue pens will increase both the equilibrium price and quantity in the market for black pens
true
binding minimum wage creates unemployment
true
decrease in supply will cause an increase in price, which will cause a decrease in quantity demanded
true
if producing a soccer ball costs jake $5, and sells it for $40, his producer surplus is $35
true
if the producers of canned beans expect the price of canned green beans to increase in the future due to an increase in demand, they may put some of their current productions into storage and supply less in the market today
true
if we can conclude that human life has infinite value, cost-benefit analysis can lead to solutions in which human life is worth less than the cost of a potential project
true
jessica receives a raise at her current part time job from $9 to $11. If her labor supply is backwards sloping, she will still work fewer hours after receiving the pay raise
true
local cable companies frequently are monopoloists
true
rent control may lead to lower rents for those who find housing, but the quality of housing may also be lower
true
social welfare can be enhanced by allowing firms to trade their rights to pollute
true
the government can internalize externalities by taxing goods that have negative externalities and subsidizing goods that have positive externalities
true
the law of supply states that, other things equal, when the price of a good falls, the quantity supplied falls as well
true
the term tax incidence refers to how the burden of a tax is distributed among the various people who make up the economy
true
when an increase in the price of one good lowers the demand for another good, the two goods are called complements
true
An outcome that can result from either a price ceiling or a price floor is
undesirable rationing of mechanisms
a sellers opportunity costs measures the
value of everything she must give up to produce a good.
which of the following is an example of a normative statement
when minimum wage in increased, unemployment is a predictable consequence
which following statements is correct?
who actually pays a tax depends on the price elasticities of supply and demand
the marginal seller is the seller
who would leave the market first if the price were any lower, and the marginal buyer is the buyer who would leave the market first if the price were any higher.
a normative economics statement such as "the minimum wage should be abolished"
would require values and data to be evaluated