Econ 201 Test 2
The U.S. Congress first instituted a minimum wage in
1938
Elasticity is
A measure of how much buyers and sellers respond to changes in market conditions
Laissez-faire means
All them to do
Producer surplus equals
Amount received by sellers - Costs of sellers.
Studies indicate tobacco and marijuana tend to be
Compliments
Measures the benefit buyers receive from participating in a market
Consumer surplus
Total surplus is
Equal to the total value to buyers minus the cost to sellers
Which of the following is not an example of public policy?
Equilibrium Law
The sum of all individual demand curves for a product is called
Market Demand
Price controls
Often hurt those they are designed to help
Consumer surplus
On demand curve (top of supply and demand curve)
The highest form of competition is called
Perfect Competition
A legal minimum on the price at which a good can be sold is called
Price Floor
The two words economists use most often are
Supply and demand
The minimum wage has its greatest impact on the market for
Teenage Labor
Which of the following is an example of a highly organized market?
The market for soybeans
Which of the following will cause an increase in producer surplus?
The price of a substitute increases
Consumer surplus equals
Value to buyer minus amount paid by buyers
Market power refers to the
ability of market participants to influence price
Total surplus in a market is equal to
consumer surplus + producer surplus
A tax on the sellers of coffee mugs
decreases the size of the coffee mug market
When a payroll tax is enacted, the wage received by workers
falls, and wage paid by firms rises
The law of demand states that, other things equal, when the price of a good
falls, the quantity demanded of good rises
When quantity demand responds strongly to changes in price demand is
fluid
The flatter the demand curve through a given point
greater the price elasticity of demand at that point
The goal of rent control is to
help the poor by making housing more affordable
A market for ice cream is a
highly competitive market
Welfare economics is the study of
how the allocation of resources affects economic well-being
The French expression used by free market advocates, "allow them to do" is
ie ne sais pas
If a decrease in income increases the demand for a good, then the good is a(n)
inferior good
Another name for equilibrium price
market clearing price
producer surplus
on supply curve (bottom of supply and demand curve)
A supply schedule shows a relationship between
price and quantity supplied
When drawing a demand curve,
price is measured along the vertical axis, and quantity demanded is measured along the horizontal axis.
The law of supply states, other things equal, when the price of a good
rises, the quantity supplied of the good rises.
A monopoly is a market with one
seller, and that seller sets the price
Economists typically measure efficiency using
total surplus
The earned Income tax credit is an example of
wage subsidy
Who gets scarce resources in a market economy?
whoever is willing and able to pay the price
The maximum price that a buyer will pay for a good is called
willingness to pay
