eco test 2 part 3

If the price elasticity of demand for a good is 2.0, then a 10 percent increase in price results in a

2*10=20 percent decrease

Which of the following statements is correct concerning the burden of a tax imposed on take-out food?

Buyers and sellers share the burden of the tax.

Erin would be willing to pay as much as $100 per week to have her house cleaned. Ernesto's opportunity cost of cleaning Erin's house is $70 per week. Assume Erin is required to pay a tax of $5 when she hires someone to clean her house. Which of the following is true? Group of answer choices

Erin will continue to hire Ernesto to clean her house, but her consumer surplus will decline.

Which of the following statements is valid when the market supply curve is vertical?

Market quantity supplied does not change when the price changes.

Which of the following statements correctly describes the relationship between the size of the deadweight loss and the amount of tax revenue as the size of a tax increases from a small tax to a medium tax and finally to a large tax?

The size of the deadweight loss increases, but the tax revenue first increases, then decreases.

A recent news report lamented the plight of corn farmers in Wisconsin due to a severe drought. Which of the following best describes the effect on corn farmers in Minnesota, where sufficient rainfall occurred?

Their revenue increases because price increases and demand is inelastic.

Which of the following is likely to have the most price elastic demand? clothing Tommy Hilfiger jeans blue jeans All three would have the same elasticity of demand because they are all related.

Tommy Hilfiger jeans

When demand is elastic, an increase in price will cause

a decrease in total revenue

If a tax is imposed on a market with inelastic demand and elastic supply, then

buyers will bear most of the burden of the tax.

When the nation of Isoland opens up its steel market to international trade, that change

creates winners and losers, regardless of whether Isoland ends up exporting or importing steel.

A tax on the buyers of cereal will increase the price of cereal paid by buyers,

decrease the effective price of cereal received by sellers, and decrease the equilibrium quantity of cereal.

The midpoint method is used to compute elasticity because it

gives the same answer regardless of the direction of change.

If the labor supply curve is nearly vertical, a tax on labor

has little impact on the amount of work that workers are willing to do.

At present, the maximum legal price for a human kidney is $0. The price of $0 maximizes

neither consumer nor producer surplus.

Frequently, in the short run, the quantity supplied of a good is

not very responsive to price changes.

Assume, for Mexico, that the domestic price of beets without international trade is higher than the world price of beets. This suggests that, in the production of beets,

other countries have a comparative advantage over Mexico and Mexico will import beets.

If a price floor is a binding constraint on a market, then

sellers cannot sell all they want to sell at the price floor.

Suppose the market demand curve for a good passes through the point (quantity demanded = 100, price = $25). If there are five buyers in the market, then

the marginal buyer's willingness to pay for the 100th unit of the good is $25.

Jerome says that he will spend exactly $25 each month on new apps for his mobile device, regardless of the price of apps. Jerome's demand for apps is

unit elastic.