ECON (micro)
the price elasticity of demand for bread
-depends on the availability for close substitutes -computed as percent change in quantity demanded divided by percent change in price -reflects the forces that influence customers
midpoint method
...
suppose good X has a negative income elasticity of demand. this implies that good X is
an inferior good
a linear upward sloping supply curve has
both a constant slope and a constant elasticity of supply
a decrease in supply will cause the smallest increase in price when
both supply and demand are elastic
suppose a producer is able to separate customers into two groups, one having an elastic demand and one havin an inelastic demand. if the producers objective is to increase total revenue, she should
decrease theprice charged to customers with the elastic demand and increase the price charged to customers with the inelastic demand
if marajuana were legalized, it is likely that there would be an increase in the supply of marajuana. advocates of marajuana legalization argue that this is would significantly reduce the amount of revenue going to the criminal organizations that currently supply. these advocates believe that
demand for marajuana is inelastic
when the government places a tax on a product, the cost of the tax to buyers and sellers
exceeds the revenue raised from the tax by the government
if the japanese steel industry subsidizes the steel that it sells to the united states, the
harm done to the us steel producers is less than the benefit that accrues to us consumers of steel
a person who takes a necessary prescription drug has a ______ demand for it
inelastic
the deadweight loss from a $2 tax will be smallest in a market with
inelastic demand and inelastic supply
the french expression used by free market advocates
laissez-faire
luxuries
large income elasticity (consumers can do without goods if their income is low)
the supply of a good will be more elastic, the
longer the time period being considered
if the supply of land is fixed, the burden of a tax on land falls
partly on landowners and partly on users of the land
when the nation of Duxembourg allows trade and becomes an importer of software,
producers become worse off, residents that buy software become better off, the economic profit of duxembourg rises.
a perfectly inelastic demand implies that buyers
purchase the same amount as before when the price changes
necessities
small income elasticity of demand (consumers buy even when income is low)
a tax on an imported good is called a
tariff
one result of a tax regardless of if the tax is placed on buyers or sellers is that the
tax reduces the welfare of both
consumer surplus is
the amount a buyer is willing to pay for a good minus the amount the buyeer actually pays
producer surplus is
the amount a seller is paid minus the cost of production
suppose that in a particular market, the supply curve is highly elastic and the demand curve is highly inelastic. if a tax is imposed in this market, then
the buyers will bear a greater burden of the tax then the sellers
if a country allows trade and, for a certain good, the domestic price without trade is lower than the world price,
the country will be an exporter of the good
what happens when supply is perfectly elastic at a price of 4$
the elasticity of supply approaches infinity
the value of the price elasticity of demand for a good will be relatively large when
the good is a luxury as opposed to a necessity
the price elasticity of supply measures how much..
the quantity supplied responds to changes in the price of a good
taxes on labor have the effect of
unscrupulous people to take part in the underground economy
if a tax is levied on the sellers of a product, then there will be a(n)
upward shift of the supply curve.
