EconExam_2
If the price of a good increases by 20% and the quantity demanded changes by 15%, then the price elasticity of demand is equal to ________.
-15%/20% = 0.75
If the price of a good increases by 15% and the quantity demanded changes by 20%, then price elasticity of demand is equal to?
-20%/15% = -1.33
Each month Jacquelyn spends exactly $50 on ice cream regardless of the price of each container. Jacquelyn's price elasticity of demand for ice cream is _______.
1
The Cozy Chair Company believes it can sell 200 chairs at $200 per chair or 300 chairs at $150 per chair. Using the midpoint formula, what do they think is the price elasticity of demand?
1.4
Jeanette is willing to pay $100 for the first pair of shoes, $80 for the second pair, $50 for the third, and $30 for the fourth. If shoes cost $50, Jeanette will buy _____ pairs of shoes and her total consumer surplus equals _____.
3, $80
Egg producers know that the elasticity of demand for eggs is 0.1. If they want to increase sales by 5%, they will have to lower the price by _______.
50%
If the government sets out to help low-income people by establishing a maximum amount that can be paid for rent __________.
a price ceiling has been set and a shortage of rental units may occur
Producer surplus is represented by the area _____ the supply curve and _____ the price.
above, below
When calculated for a normal demand curve, the price elasticity of demand will?
always be negative
The domestic price is PA, the ________ at which the domestic supply curve and the domestic demand curve intersect.
autarky price
The _______ is unrelated to who actually pays money to the government.
burden of a tax
The basis for trade is ___________, not Absolute Advantage.
comparative advantage
Taxes generate __________, a reduction in total surplus relative to the efficient level.
deadweight loss
Determinants of Price Elasticity of Demand : Luxuries are more _______.
elastic
When Cowboy Blues LOWERS the price of their blue jeans by 31%, the number of jeans sold INCREASES by 42%. Is this example elastic or inelastic?
elastic
When Cowboy Blues RAISES the price of their blue jeans by 48%, the number of jeans sold DECREASES by 63%. Is this example elastic or inelastic?
elastic
______ is a measure of responsiveness.
elasticity
_________ produce goods and services that are sold abroad.
exporting industries
In a single year, Argentina can raise 100 tons of beef and produce 1,000 boxes of tulips. Uruguay can raise 50 tons of beef or produce 750 boxes of tulips. When the two countries begin trading beef or tulips, one would expect the consumer surplus from beef consumption to?
fall in argentina
_______ government does not attempt either to reduce or to increase the levels of exports and imports that occur naturally as a result of supply and demand.
free trade
_______ produce goods and services that are also imported.
import-competing industries
For a good to be considered a normal good, the _____ must be _____.
income elasticity of demand, greater than 0
After a price decrease, the quantity effect tends to?
increase total revenue
When Cowboy Blues LOWERS the price of their blue jeans by 24%, the number of jeans sold INCREASES by 13%. Is this example elastic or inelastic?
inelastic
When Cowboy Blues LOWERS the price of their blue jeans by 50%, the number of jeans sold INCREASES by 34%. Is this example elastic or inelastic?
inelastic
Determinants of Price Elasticity of Demand : Less substitutes = _________
less elastic
Determinants of Price Elasticity of Demand : More substitutes = _________
more elastic
Total Revenue = _______
price * quantity
If a university DECREASES the price of tickets to football games to collect MORE revenue, it is assuming that the demand for tickets is?
price-elastic
If the government imposes a $5 excise tax on leather shoes and the price of leather shoes increases by $2 ________.
producers are paying more of the tax than the consumers
The price elasticity of demand for gasoline in the short run has been estimated to be -0.4. If war in the Middle East causes the price of oil (from which gasoline is made) to INCREASE, how will that affect total revenue from gasoline in the short run, all other things unchanged?
quantity demanded will decrease and total revenue will rise
_______ are limits on the number of imported goods.
quotas
When the price goes down, the quantity demanded goes up. The price elasticity measures how _________.
responsive the quantity change is in relation to the price change
Suppose the cross-price elasticity of demand for butter and margarine is equal to 0.96 but the cross price elasticity for water and lemons is −0.13. This means that butter and margarine are _____ whereas water and lemons are _____.
substitutes, complements
_______ are a tax on imported goods.
tariffs
The size of the ________ is unrelated to elasticity.
tax wedge
Greater share of the tax burden should be borne by people who have a greater ability to pay.
the ability-to-pay principle
People who receive the benefits from a government program should pay the tax that support the program.
the benefits-received principle
Suppose the government imposes a $10 excise tax on the sale of sweaters by charging suppliers $10 for each sweater sold. Using economic analysis, if demand is downward sloping and supply is upward sloping, one would predict that _______.
the price of sweaters will increase but by less than $10
Which statement is the best definition of the price elasticity of demand?
the ratio of the percent change in quantity demanded to the percent change in price
Suppose the price elasticity of demand for blueberries is -1.5. If climate change destroys one-fourth of the nation's blueberry crop (and thus reduces supply), how will that affect total revenue, all other things unchanged?
total revenue will fall
Policies that limit imports are known as _______ or simply as ________.
trade protection, protection
Which statement best characterizes the relationship between the elasticity of demand, price, and total revenue?
when demand is elastic and price falls, total revenue rises
Tax incidence refers to ________.
who really pays the tax
If a frost destroys much of the grapefruit crop and the demand for grapefruit is downward sloping, total surplus in the grapefruit market _______.
will decrease
The price at which that good can be bought or sold abroad.
world price
When a market is opened to trade, competition among importers or exporters drives the domestic price (PA) to equality with the ________.
world price
