ECO TEST 2
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
