ECO 202 MODULE #2 REVIEW
The law of demand states that, other things being equal, when the price of a good
falls, the demand for the good rises
Pizza is a normal good if the demand
for pizza rises when income rises
The vertical distance between points A and B represents the tax in the market. The amount of the tax per unit is
$14
Soup is an inferior good if the demand
for soup falls when income rises.
The vertical distance between point A and B represents the tax in the market. The price that buyers pay after the tax is imposed is
$24
The equilibrium price and quantity, respectively, are
$3 and 50 units
At what price would there be an excess supply of 400 units of the good?
$35
The goal of rent control is to
Help the poor by making a housing affordable
Suppose that when the price of a 16 oz. to go cup of gourmet coffee is $4.25, students purchase 750 cups per day. If the price decreases to $3.75 per cup, which of the following is most likely outcome?
Students would purchase more than 750 cups per day.
What would happen to the equilibrium price and quantity of lattes is coffee shops began using a machine that reduced the amount if labor necessary to produce them?
The equilibrium price would decrease, and the equilibrium quantity would increase
Which of the following events would cause a movement upward and to the left along the demand curve for olives?
The price of olives rises.
Which of the following would not increase in response to a decrease in the price of ironing boards?
The quantity of irons supplied at each possible price of irons
Which of these statements is true?
Who bears the burden of the tax depends on the price elasticities of supply and demand
A shortage results when a
a binding price ceiling is imposed
Which of the following observations would be consistent with the imposition if a binding price ceiling on a market? After the price ceiling is established?
a larger quantity of the good is demanded
If the demand for a good falls when income falls, then the good is called
a normal good
A payroll tax is a
a tax on the wages that firms pay their workers
The shift from S' to S in the market for chocolate cane could be caused by
an increase in the price of butter
The movement from point A to point B on the graph is caused by
an increase in the price of the good
In this market, a minimum wage of $6 is
binding and creates unemployment.
A government-imposed price of $24 in this market is an example of a
binding price floor that creates a surplus.
A likely example of complementary goods for most people would be
coffee and sugar
The line that related the price of a good and the quantity demanded of that good is called the demand
curve, and it usually slopes downward
The movement from point A to point B on the graph is caused by
decrease in price
A tax on the sellers of coffee will increase the price of coffee paid by buyers,
decrease the effective price of coffee received by sellers, and decrease the equilibrium quantity of coffee.
It is apparent from the figure that the
demand for the good conforms to the law of demand.
At the equilibrium price, the quantity of the good that buyers are willing and able to buy
exactly equals the quantity that sellers are willing and able to sell.
An increase in the price of a good will
increase in quantity supplied
Currently you purchase ten frozen pizza per month. You will graduate from college in December, and you will start a new job in January. You have no plans to purchase frozen pizzas in January. For you, frozen pizzas are a(n)
inferior good
A supply schedule is a table that shows the relationship between
price and quantity supplied
A legal minimum on the price at which a good can be sold is called a
price floor
If a nonbinding price ceiling is imposed on a market, then the
quantity sold in the market will stay the same
The law of supply states that, other things being equal, when the price of a good
rises, the quantity supplied of the good rises
The quantity supplied of a good is the amount that
sellers are willing and able to sell
At a price of $15, there would be a
shortage of 400 units
If the number of sellers in a market increases, then the
supply in that market will increase
In this market, a minimum wage of $6 created a labor
surplus of 4,000 worker hours
Suppose sunflowers are currently selling for $45 per dozen, but the equilibrium price of sunflowers is $25 per dozen. We would expect a
surplus to exist and the market price of sunflowers to decrease
In the 1970s, long lines at the gas stations in the United States were primarily a result of the fact that
the U.S. government maintained a price ceiling on gasoline.
A baker recently has come to expect higher prices for bread in the near future. We would expect
the baker to supply less bread now than she was supplying previously.
Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling,
the quantity demanded of physicals increases and the quantity supplied of physicals decreases.
If something happens to alter the quantity supplied at any given price, then
the supply curve shifts
How is the burden of the tax shared between buyers and sellers? Buyers bear
three-fourths of the burden, and sellers bear one-fourth of the burden.