practice exam 2 econ

when the piece of a bracelet was $28 each the jewelry shop sold 128 per month. When it raised to $32 , it sold 112 per month. Using the midpoint method the price elasticity if the demand for bracelets is

1

Dallas buys strawberries, and he would be willing to pay more than he now pays. Suppose that Dallas has a change in his tastes such that he values strawberries more than before. If the market price is the same as before, then

Dallas's consumer surplus would increase.

Using the midpoint method, the price elasticity of demand for a good is computed to be approximately 0.75. Which of the following events is consistent with a 10 percent decrease in the quantity of the good demanded?

a 13.33 percent increase in the price of the good

A life-saving medicine without any close substitutes will tend to have

a small price elasticity of demand

when a tax is placed on the sellers of cell phones, the size of the cell phone market

and the effective price received by sellers both decrease

If a shortage exists in a market, then we know that the actual price is

below the equilibrium price, and quantity demanded is greater than quantity supplied.

a government imposed price of $24 in this market is an example of a

binding price floor that creates a surplus

when a tax is placed on the buyers of lemonade the

burden of the tax will be shared by the buyers and the sellers, but the division of the burden is not always equal.

if the government wants to reduce smoking it should impose a tax on

either buyers or sellers of cigarettes.

total surplus is

equal to the total value to buyers minus the cost to sellers

A consumer's willingness to pay directly measures

how much a buyer values a good

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,

quantity demanded of physicals increases, and the quantity supplied of physicals decreases. there is also a shortage. all correct

When consumers face rising gasoline prices, they typically

reduce their quantity demanded more in the long run than in the short run

As the size of a tax rises, the deadweight loss

rises, and tax revenue first rises, then falls

the laffer curve illustrates that

tax revenue first rises, then falls as a tax increases.

For a good that is a luxury, demand

tends to be elastic

producer surplus is

the amount a seller is paid minus the cost of production

Efficiency in a market is achieved when

the sum of producer surplus and consumer surplus is maximized

which of the following is not true of the price of a good or service falls

the total value of purchases before and after the price change is the same

which is correct

total surplus is measured as the area below the demand curve and above the supply curve up to the equilibrium quantity