Sapling Learning Questions Test 2

those opposed to high minimum wage argue that the elasticity of labor demand for unskilled labor is ___. this is because firms can adjust their employment and production better in the long run

elastic

if a minimum wage is set above the equilibrium wage, then the more ___ the labor supply and the more ____ the labor demand, the higher the unemployment rate. In the long run, both labor supply and labor demanded are more ____

elastic elastic elastic

the more ____ the demand and the more ___ the supply

elastic inelastic

If income elasticity of demand for ibuprofen was 0.73, then you could say that ibuprofen is ______

normal good

If the price elasticity of supply for aluminum is 0.09, then price elasticy of supply for aluminum is

relatively inelastic

One explanation for this is that in the long run, firms can make changes to the amount of housing they provide ____ easily than (as) they can in the short run

more

cosmetic surgery more or less elastic than emergency surgery?

more

wall street journal more or less elastic than wall street journal at the airport?

more

demand for a luxury item tends to be

more elastic

demand for an object that uses a large portion of your budget tends to be

more elastic

over longer periods of time demand tends to be

more elastic

You are the product manager of Tide at Proctor and Gamble. The company is considering a 18.00% price increase and the CEO asks you to tell him how quantity demanded will change as a result. You know that the price elasticity for Tide is -1.10. You answer the CEO that quantity demanded will change by

-19.8%

CapCityMetro decides to increase bus fare rates from $2.00 to $2.21. Consequently, the number of passengers who decide to take the bus in Austin drops from an average of 70,000 riders a day to an average of 61,000 riders a day.

elastic

equation for price elasticity of demand

ED = percentage change in the quantity demanded/ percentage change in price

TF? A problem with price ceilings is that they lead in surpluses

False

TF? Price ceilings result in resources being allocated to activities with the highest possible values

False

TF? Though they may face higher prices, consumers usually see an increase in product quality when price ceilings are imposed

False

how does price elasticity of supply measure?

How responsive quantity supplied is to a change in price

When Ruko, a device used to stream movies at home, increases prices by 51% total revenue decreases by 67%.

elastic

TF? Price ceilings result in a reduction in mutually beneficial exchanges

True

TF? When price ceillings are imposed, consumers pay lower explicit prices but often face higher costs in terms of waiting in line for goods and services

True

What is the advocate's economic reasoning?

a higher minimum wage would only slightly depress the labor market for unskilled labor

Betty purchases raw (unpasteurized) milk even though the sale of raw milk is illegal

black market

total inefficiency caused by a tax is also known as

deadweight loss

governments that are interested in minimizing the efficiency costs of taxation should only tax goods where

demand or supply, or both, are relatively inelastic

What does income elasticity of demand measure?

how responsive quantity demanded is to changes in income

what does cross elasticity of demand measure?

how responsive the quantity demanded of one good is to changes in the price of another

welfare economics studies

how the allocation of resources affects everybody's well-being

Advocates believe elasticity of labor demanded is ...

inelastic

Economists working for the United States have determined that the elasticity of demand for gasoline is 0.5.

inelastic

When BlueBox, a DVD rental kiosk, increases its prices by 48%, total revenue increases by 22%.

inelastic

Because of differences in firms' ability to make changes to quantity supplied, the long-run supply curve for housing is modeled as a line that is ___ sleep than (as) the short-run supply curve

less

Therefore, supply is ___ elastic in the short run than (as) in the long run

less

monthly electric consumption more or less elastic than emergency surgery?

less

with fewer substitutes demand tends to be

less elastic

In the long run, the shortages of available housing resulting from rent controls are ____ pronounced that (as) they are in the short run

more

What is an example of price gouging law?

the gvnmt places a price ceiling on flashlights. the price ceiling is normally non-binding and is intended to keep prices from getting too high after a natural disaster

consumer surplus is equal to the difference between

the max price a buyer is willing to pay and the market price

What is a price ceiling?

the maximum price that can be charged

Suppose the cross elasticity of demand between Aleve and aspirin is 2.51. What can you say about Aleve and aspirin?

they are substitute goods

consumer surplus is shown graphically as the area

under the demand curve and above the market price

Contain Yourself!, a plastic container company, raises the price of its signature \"lunchbox\" container from $3.00 to $4.00. As a result, the quantity sold drops from 20,000 to 15,000.

unit-elastic

When Cinema Supreme decreases ticket prices by 5%, total revenue does not change.

unit-elastic