Econ test 2

Demand is elastic if the price elasticity of demand is

greater than 1

Total surplus

Can be used to measure a markets efficiency, is the sum of consumer and producer surplus, is the value to buyers minus the cost to sellers

A binding price ceiling is a post on the market,

Price no longer serves as a rationing device

To say that a price ceiling is binding is to say that a price ceiling

Result in a shortage, and supplies equilibrium price, causes quantity demanded to exceed quantity supplied

Buyers of a good bet a larger share of the tax burden When the

Supplies more elastic than the demand for the product

For particular good, a 2% increase in price causes a 12% decrease in quality demanded. Which of the following statements is most likely applicable to the good

The good is a luxury

For particular good, a 5% increase in price causes a 15% decrease in quality demanded. Which of the following statements is most likely applicable to this good

There a many substitutes

When a supply curve is relatively flat, the

supply is relatively elastic

David tunes pianos in his spare time for extra income. buyers of his service are willing to be $135 per tending. One particular week, David is willing to turn the first piano for $115, the second piano for $125, the third for piano for $140 in the fourth panel for $175. Assume David is rational and deciding how many pianist to tune. His producer surplus is

$30

When the price of a good is five dollars, the quantity demanded is 120 units per month; when the price is seven dollars, the quantity demanded is 100 units per month. using the midpoint method the price elasticity of demand is about

.55

If the price elasticity of demand for a good as .2, then a 3% decrease in price results in

.6% increase in the quantity demanded

If a 10% decrease in price for a good results and 20% increase in quantity demanded, the price elasticity of demand is

2

If the price elasticity of demand for a good is 1.2, then 3% decrease in price results in a

3.6% increase in the quantity demanded

If the price elasticity of supply is 1.2, and a price increase lead to a 5% increase in quantity supplied then the price increase is about

4.2%

If the price elasticity of supply for window manufactures 1.5,

A 10% increase in the price of windows results in a 15% increase in the quantity of windows supplied

Using the midpoint method, the price elasticity of demand for a good is computer to be approximately .75. Which of the following events is consistent with a 10% decrease in the quantity of a good demanded

A 13.33 percent increase in the price of the good

The shortage is eliminated when

A binding price ceiling is removed

If a binding price floor is imposed on the market for ebooks, then

A surplus of e-books will develop

Total surplus is represented by the area

Between the demand and supply curves up to the point of equilibrium

Calling all other forces constant, when the price of gasoline rises, the number of gallons of gasoline demanded by the fall substantially over a ten-year period

Buyers tend to be more sensitive to a change in price when given more time to react

Demand is said to be unit elastic of quantity demanded

Changes by the same percent is the price

A tax on the sellers of coffee mugs

Decreases the size of the coffee mug market

Sellers of a good bear the larger share of the tax burden on a tax is placed on a product for which the

Demand is more elastic in the supply

When the price of an e-book is $15, the quantity demanded is 400 e-books per day. When the price falls to $10 the quantity demanded increases to 700. Given this information using the midpoint method, we know that the demand for e-books is

Elastic

Holding all other factors constant and using the midpoint method if the candy manufacture increases production by 20% on the market price of candy increases from $.5 to $.6 in supply is

Elastic, since the price elasticity of supply is equal to 1.1

Total surplus is

Equal to the total value to buyers minus total cost sellers

Which of the following is correct? A Tax burden

Falls more heavily on the side of the market that is less elastic

If producing a soccer ball cost Jake five dollars, and he sells it for $40, his producer surplus is $45

False

Inelastic

Holding all other forces constant, if decrease in the price of a good leads to a decrease in total revenue, then the demand for the good must be

Increase by 12%

If the price elasticity of supply is 1.2, and price increase by 10% quantity supplied would

One year after the price increase

If the price of gasoline rises, when is the price elasticity of demand likely to be highest

Holding all other force is constant, if decreasing the price of a good leads to a decrease in total revenue than the demand for the good must be

Inelastic

Inefficiency can be caused in a market by the presence of

Market power, externalities, imperfectly competitive markets

Total surplus in a market will increase when the government

Neither a Nor B is correct

When a binding price for is imposed on market

Price no longer serves as a rationing device, the quantity supplied at this price floor exceeds the quantity that would have been supplied without the price work, only some sellers benefit

Demand is said to be an elastic if the

Quantity demanded changes proportionately less than the price

Suppose there's currently a tax of $50 per ticket on airline tickets. Sellers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $30 per ticket, then the

Supply curve will shift downward by $20, and the price paid by buyers will decrease by less than $20

The supply of oil is likely to be

inelastic in the short run and elastic in the long run

If the current allocation of resources in the market for wallpaper is efficient, then it must be the case that

The market for wallpaper is in equilibrium

For a particular good, a 3% increase in price causes a 10% decrease in quantity demanded. Which of the following statements is most likely applicable to this good

There are many close substitutes

Which of the following is likely to have the most price in elastic demand

Toothpaste

Which of the following is correct

Total surplus is measured as the area below the demand curve and above the supply curve up to the equilibrium quantity

If the price elasticity of demand is equal to one, the demand is unit elastic

True

If we observe that when the price of chocolate increases by 10%, quantity demanded falls by 5% in the demand for chocolate is price inelastic

True

A binding minimum wage

alters both the quantity demanded and quantity supplied of labor.

Example of a price floor is

minimum wage