Eco Exam 2
Refer to Figure 6-22. Buyers pay how much of the tax per unit?
$1.50
Refer to Figure 5-5. At a price of $70 per unit, sellers' total revenue equals
$1050
Refer to Figure 5-8. When the price is $15, total revenue is
$4,500.
Refer to Figure 6-26. How much tax revenue does this tax produce for the government?
$480
Figure 7-1. If the price of the good is $250, then consumer surplus amounts to
$50
Refer to Figure 6-25. The price that buyers pay after the tax is imposed is
$8
When the price of a good is $5, the quantity demanded is 100 units per month; when the price is $7, the quantity demanded is 80 units per month. Using the midpoint method, the price elasticity of demand is about
.67
Refer to Figure 5-13. Between point A and point B, price elasticity of demand using the midpoint method is equal to
.85
Studies of the effects of the minimum wage typically find that a 10 percent increase in the minimum wage depresses teenage employment by about
1 to 3 percent.
If a 15% change in price results in a 20% change in quantity supplied, then the price elasticity of supply is about
1.33, and supply is elastic.
Refer to Figure 6-28. Suppose a tax of $6 per unit is imposed on this market. What will be the new equilibrium quantity in this market?
20 units
Suppose Katie, Kendra, and Kristen each purchase a particular type of cell phone at a price of $80. Katie's willingness to pay was $100, Kendra's willingness to pay was $95, and Kristen's willingness to pay was $80. Which of the following statements is correct?
For the three individuals together, consumer surplus amounts to $35.
Suppose the demand for peanuts increases. What will happen to producer surplus in the market for peanuts?
It increases
As a result of a decrease in price
New buyers enter the market, increasing consumer surplus
Refer to Figure 5-20. Which supply curve represents perfectly inelastic supply?
S1
If a tax is imposed on a market with inelastic supply and elastic demand, then
Sellers will bear most of the burden of the tax
Consumer surplus is equal to the
Value to buyers - Amount paid by buyers.
Rent-control laws dictate
a maximum rent that landlords may charge tenants.
Refer to Figure 6-2. The price ceiling
a. is binding. b. causes a shortage. c. causes the quantity demanded to exceed the quantity supplied.
The price elasticity of demand for bread
a. is computed as the percentage change in quantity demanded of bread divided by the percentage change in price of bread. b. reflects the many economic, social, and psychological forces that influence consumers' tastes for bread. c. depends, in part, on the availability of close substitutes for bread.
Suppose good X has a negative income elasticity of demand. This implies that good X is
an inferior good
The price elasticity of demand measures
buyers' responsiveness to a change in the price of a good.
The price elasticity of demand for a good measures the willingness of
consumers to buy less of the good as price rises.
If the government removes a tax on a good, then the price paid by buyers will
decrease, and the price received by sellers will increase.
The minimum wage
does not apply to unpaid internships.
When quantity demanded responds strongly to changes in price, demand is said to be
elastic
Which of the following is not an example of a public policy?
equilibrium laws
The goal of rent control is to
help the poor by making housing more affordable.
The case of perfectly elastic demand is illustrated by a demand curve that is
horizontal
An example of positive analysis is studying
how market forces produce equilibrium
In general, elasticity is a measure of
how much buyers and sellers respond to changes in market conditions.
If the price elasticity of supply is 0.8, and price increased by 5%, quantity supplied would
increase by 4%.
Consumer surplus
is measured using the demand curve for a product
Refer to Figure 6-4. A government-imposed price of $16 in this market could be an example of a
non-binding price ceiling. binding price floor.
Which of the following expressions represents a cross-price elasticity of demand?
percentage change in quantity demanded of bread divided by percentage change in price of butter
The price elasticity of demand measures how much
quanitity demanded responds to a change in price
Cost is a measure of the
seller's willingness to sell
The price elasticity of supply measures how responsive
sellers are to a change in price.
When a binding price floor is imposed on a market to benefit sellers,
some sellers will not be able to sell any amount of good
The minimum wage has its greatest impact on the market for
teenage labor
The term tax incidence refers to
the distribution of the tax burden between buyers and sellers
Producer surplus directly measures
the well-being of sellers.
The minimum wage does not apply to
unpaid internships.
The price elasticity of demand for mobile phones
will be lower if consumers perceive mobile phones to be a necessity
Suppose Larry, Moe, and Curly are bidding in an auction for a mint-condition video of Charlie Chaplin's first movie. Each has in mind a maximum amount that he will bid. This maximum is called
willingness to pay
The maximum price that a buyer will pay for a good is called
willingness to pay
The marginal seller is the seller who
would leave the market first if the price were any lower.
