ECO TEST 2

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Consumer surplus

is the amount a consumer is willing to pay minus the amount the consumer actually pays

The supply of a good will be more elastic, the

longer the time period being considered

If the law of demand applies to the good, it must be

lower than the quantity demanded

If the government imposes a price ceiling of 6 dollars on this market then there will be

a shortage of 30 units. 60-30=30

Ronnie operates a lawn care service. on each day, the cost of mowing the first lawn is 15, the cost of the second is 25, the third is 40. His producer surplus on the first three lawns of the day is 100. if ronnie changes all customers the same price for lawn mowing, the price is

$60

If the price elasticity of supply is .4, and a price increase led to a 5% increase in quantity supplied, then the price increase is about

12.5 %

A 10 percent increase in gasoline prices reduces gasoline consumption by about

2.5 percent after one year and 6 percent after 5 years

Refer to the table. If the market price is 1,000, the producer surplus in the market is

300

If the price of the product is $122, then the total consumer surplus is

41. Calvin and sam would buy. Calvin was 150 so 150-122= 28. Sam was 135-122=13 28+13=41

Which of the following price ceilings would be binding in this market

6. The price ceiling must be lower than the equilibrium in order to be binding

If the equilibrium price is 200, what is the producer surplus

7,500

Refer to the figure if the price of the good is 9.50, then producer surplus is

8.5

Which of the following observations would be consistent with the imposition of a binding price ceiling on a market

a smaller quantity of the good is bought and sold

At equilibrium, consumer surplus is represented by the area

A+B+C

If the price of a product is $110, then who would be willing to purchase the product

Calvin, sam and andrew

If the price were P3, consumer surplus would be represented by the area

E. Only A

A binding ceiling is only shown in

Panel B

Midpoint method equation

Q2-Q1/Q2+Q1/2 / P2-P1/P1+P2/2

Which of the following is consistent with the elasticities given in the table above

a is a luxury and b is a necessity

Minimum wage laws dictate

a minimum wage that firms may pay workers

The movement from point A to point B on the graph shows a

increase in quantity demanded

the shift from s to s', to the right, is called an

increase in supply

On a graph, consumer surplus is represented by the area

below the demand curve and above the price

A price ceiling will be binding only if it is set

below the equilibrium price

a surplus results when a

binding price floor is imposed on a market

policymakers use taxes

both to raise revenue for public purposes and to influence market outcomes

When a buyer's willingness to pay for a good is equal to the price of the good, the

buyer is indifferent between buying the good and not buying it

Which of the following statements is correct

buyers always want to pay less and sellers always want to be paid more

a binding price ceiling

causes a shortage and is set at a price below the equilibrium price

When the price of an ebook is 15.00, the quantity demanded is 400 ebooks per day. When the price falls to 10.00, the quantity demanded increases to 700. Given this information and using the midpoint method, we know that the demand for ebooks is

elastic

Which of the following characteristics is required for a perfectly competitive market

goods are offered for sale are exactly the same there are so many buyers and sellers that no single buyer or seller has any influence over the market price

In general, elasticity is a measure of

how much buyers and sellers respond to changes in market condidtions

Another term for equilibrium price is

market clearing price

IF the government imposes a price floor of 6 dollars on this market, then there will be

no surplus. The price floor must be higher than the equalibrium

In a competitive market, the price of a product

none of the above

In a competitive market free of government regulation

price adjusts until quantity demanded equals quantity supplied

Demand is said to be inelastic if the

quantity demanded changes proportionately less than the price

When consumers face rising gasoline prices, they typically

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

Which of the following is the most likely explanation for the imposition of a price floor on the market for corn

sellers of corn, recognizing that the price floor is goo for them, have pressured policymakers into imposing the price floor

A key determinant of the price elasticity of supply is

the ability of sellers to change the price of the good they produce

Which of the following is likely to have the most price inelastic demand

toothpaste

The study of how the allocation of resources affects economic well-being is called

welfare economics

Price controls are usually enacted

when policymakers believe that the market price of a good or service is unfair to buyers or sellers

which of the following statements is not correct

when the price is 6, there is a shortage of 8 units


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