ECON practice midterm 1

Elasticity is...

a measure of how buyers and sellers respond to change

It does not matter whether a tax is levied on the buyers or sellers of a good because...

buyers and sellers will share the burden of the tax

Demand is said to be price elastic if...

buyers respond substantially to changes in the price of the good

The cross-price elasticity of demand can tell us whether goods are...

complements or substitutes

Deadweight loss is the...

decline in a total surplus that results from a tax

Two goods are substitutes when a decrease in the price of one good...

decreases the demand for the other good

Elasticity of demand is closely related to the...

demand curve

The more responsive buyers are to a change in price, the...

flatter the demand curve will be

A supply curve can be used to measure producer surplus because...

it reflects the sellers costs

In a competitive market, each seller has limited control over the price of his product because...

other sellers are offering similar products

The presence of a price control in a market for a good or service usually is an indication that...

policymakers believed that the price that prevailed in that market in the absence of price controls was unfair to buyers or sellers

A legal maximum on the price at which a good can be sold is called a...

price ceiling

A legal minimum on the price at which a good can be sold is called a...

price floor

A tax imposed on the sellers of a good will raise the...

price paid by buyers and lower the equilibrium quantity

Willingness to pay measures...

the value that a buyer places on a good

When the price of a good or service changes...

there is a movement along a given demand curve

The demand for a good or service is determined by...

those who buy the good or service

The quantity demanded of a good is the amount that buyers are...

willing and able to purchase