Econ Exam 2
Studies of the effects of the minimum wage typically find that a 10 percent increase in the minimum wage depresses teenage employment by about
1 to 3 percent.
If a 15% change in price results in a 20% change in quantity supplied, then the price elasticity of supply is about
1.33, and supply is elastic.
Rent-control laws dictate
A maximum rent that landlords may charge tenants
The price elasticity of demand for bread
All of the above are correct. a. depends, in part, on the availability of close substitutes for bread. b. is computed as the percentage change in quantity demanded of bread divided by the percentage change in price of bread. c. reflects the many economic, social, and psychological forces that influence consumers' tastes for bread.
Suppose good X has a negative income elasticity of demand. This implies that good X is
An inferior good
Suppose good X has a negative income elasticity of demand. This implies that good X is
An inferior good.
A price ceiling will only be binding only if it is set
Below the equilibrium price
The price elasticity of demand measures
Buyers' responsiveness to a change in the price of a good.
The price elasticity of demand for a good measures the willingness of
Consumers to buy less of the good as price rises.
If the government removes a tax on a good, then the price paid by buyers will
Decrease, and the price received by sellers will increase.
The minimum wage
Does not apply to unpaid internships
Suppose the demand for peanuts increases. What will happen to producer surplus in the market for peanuts?
It increases.
As a result of a decrease in price,
New buyers enter the market, increasing consumer surplus
Which of the following expressions represents a cross-price elasticity of demand?
Percentage change in quantity demanded of bread divided by percentage change in price of butter
The price elasticity of demand measures how much
Quantity demanded responds to a change in price.
Cost is a measure of the
Seller's willingness to sell.
The price elasticity of supply measures how responsive
Sellers are to a change in price
When a binding price floor is imposed on a market to benefit sellers,
Some sellers will not be able to sell any amount of the good.
In general, elasticity is a measure of
how much buyers and sellers respond to changes in market conditions.
The minimum wage has its greatest impact on the market for
Teenage labor.
The price elasticity of demand for bread
All of the above are correct. a. is computed as the percentage change in quantity demanded of bread divided by the percentage change in price of bread. b. reflects the many economic, social, and psychological forces that influence consumers' tastes for bread. c. depends, in part, on the availability of close substitutes for bread.
When quantity demanded responds strongly to changes in price, demand is said to be
Elastic.
Which of the following is not an example of a public policy?
Equilibrium laws
Suppose Katie, Kendra, and Kristen each purchase a particular type of cell phone at a price of $80. Katie's willingness to pay was $100, Kendra's willingness to pay was $95, and Kristen's willingness to pay was $80. Which of the following statements is correct?
For the three individuals together, consumer surplus amounts to $35.
The goal of rent control is to
Help the poor by making housing more affordable.
The case of perfectly elastic demand is illustrated by a demand curve that is
Horizontal.
In general, elasticity is a measure of
How much buyers and sellers respond to changes in market conditions.
If the price elasticity of supply is 0.8, and price increased by 5%, quantity supplied would
Increase by 4%.
There are very few if any good substitutes for automotive tires. Therefore, the demand for automotive tires would tend to be
Inelastic
Consumer surplus
Is measured using the demand curve for a product
Consumer surplus
Is measured using the demand curve for a product.
The term tax incidence refers to
The distribution of the tax burden between buyers and sellers
The term tax incidence refers to
The distribution of the tax burden between buyers and sellers.
The price elasticity of supply measures how much
The quantity supplied responds to changes in the price of the good.
Producer surplus directly measures
The well-being of sellers.
The minimum wage does not apply to
Unpaid internships
Consumer surplus is equal to the
Value to buyers - Amount paid by buyers.
The price elasticity of demand for mobile phones
Will be lower if consumers perceive mobile phones to be a necessity.
Suppose Larry, Moe, and Curly are bidding in an auction for a mint-condition video of Charlie Chaplin's first movie. Each has in mind a maximum amount that he will bid. This maximum is called
Willingness to pay
The maximum price that a buyer will pay for a good is called
Willingness to pay.
The marginal seller is the seller who
Would leave the market first if the price were any lower.