ECON 2300
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
