ECON (micro)

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the price elasticity of demand for bread

-depends on the availability for close substitutes -computed as percent change in quantity demanded divided by percent change in price -reflects the forces that influence customers

midpoint method

...

suppose good X has a negative income elasticity of demand. this implies that good X is

an inferior good

a linear upward sloping supply curve has

both a constant slope and a constant elasticity of supply

a decrease in supply will cause the smallest increase in price when

both supply and demand are elastic

suppose a producer is able to separate customers into two groups, one having an elastic demand and one havin an inelastic demand. if the producers objective is to increase total revenue, she should

decrease theprice charged to customers with the elastic demand and increase the price charged to customers with the inelastic demand

if marajuana were legalized, it is likely that there would be an increase in the supply of marajuana. advocates of marajuana legalization argue that this is would significantly reduce the amount of revenue going to the criminal organizations that currently supply. these advocates believe that

demand for marajuana is inelastic

when the government places a tax on a product, the cost of the tax to buyers and sellers

exceeds the revenue raised from the tax by the government

if the japanese steel industry subsidizes the steel that it sells to the united states, the

harm done to the us steel producers is less than the benefit that accrues to us consumers of steel

a person who takes a necessary prescription drug has a ______ demand for it

inelastic

the deadweight loss from a $2 tax will be smallest in a market with

inelastic demand and inelastic supply

the french expression used by free market advocates

laissez-faire

luxuries

large income elasticity (consumers can do without goods if their income is low)

the supply of a good will be more elastic, the

longer the time period being considered

if the supply of land is fixed, the burden of a tax on land falls

partly on landowners and partly on users of the land

when the nation of Duxembourg allows trade and becomes an importer of software,

producers become worse off, residents that buy software become better off, the economic profit of duxembourg rises.

a perfectly inelastic demand implies that buyers

purchase the same amount as before when the price changes

necessities

small income elasticity of demand (consumers buy even when income is low)

a tax on an imported good is called a

tariff

one result of a tax regardless of if the tax is placed on buyers or sellers is that the

tax reduces the welfare of both

consumer surplus is

the amount a buyer is willing to pay for a good minus the amount the buyeer actually pays

producer surplus is

the amount a seller is paid minus the cost of production

suppose that in a particular market, the supply curve is highly elastic and the demand curve is highly inelastic. if a tax is imposed in this market, then

the buyers will bear a greater burden of the tax then the sellers

if a country allows trade and, for a certain good, the domestic price without trade is lower than the world price,

the country will be an exporter of the good

what happens when supply is perfectly elastic at a price of 4$

the elasticity of supply approaches infinity

the value of the price elasticity of demand for a good will be relatively large when

the good is a luxury as opposed to a necessity

the price elasticity of supply measures how much..

the quantity supplied responds to changes in the price of a good

taxes on labor have the effect of

unscrupulous people to take part in the underground economy

if a tax is levied on the sellers of a product, then there will be a(n)

upward shift of the supply curve.


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