econ test 2

if gina sells a shier for $40 and her producer surplus form the sale is $32, her cost must have been

$8

if a 40% change in price results in a 25% change in quantity supplied, then the price elasticity of supply is about

0.63 and supply is inelastic

if the price elasticity of demand for a good is -1.5 then a 3 percent decrease in price results in a

4.5 increase in the quantity demanded

a price ceiling is

a legal maximum on the price at which a good can be sold

it does not matter whether a tax is levied on the buyers or the sellers of a good because

buyers and sellers will share the burden of the tax

the price elasticity of demand measures

buyers responsiveness to a change in the price of a good

holding all other faces constance, when the price of gasoline rises, the number of gallons of gasoline demanded would fall substantially over a ten year period because

buyers tend to be much more sensitive to a change in price when given more time to react

all else equal, what happens to consumer surplus if the price of a good increases

consumer surplus decreases

for a good that is a necessity

demand tends to be inelastic

Denise values a stainless steel dishwasher for her new house at $500. the actual price of the dishwasher is $650. Denise

does not buy the dishwasher, and on her purchase she experience a consumer surplus of $0

suppose the cross-price elasticity of demand between hot dogs and mustard is -2.00. this implies that a 20 percent increase in the price of hot dogs will cause the quantity of mustard purchased to

fall by 40 percent

the greater the price elasticity of demand, the

greater the responsiveness of quantity demanded to a change in price

in general, elasticity is a measure of

how much buyers and sellers respond to changes in market conditions

if an increase in income results in a decrease in the quantity demanded of a good then for that good, the

income elasticity of demand is negative

if the price elasticity of supply is 1.2, and price increased by 5%, quantity supplied would

increase by 6%

if the demand for donuts is elastic, then a decrease in the price of donuts will

increase total revenue of donut sellers

an increase in price causes an increase in total revenue when demand is

inelastic

a result of welfare economics is that the equilibrium price of a product is considered to be the best price because it

maximized the combined welfare of buyers and sellers

goods with many close substitutes tend to have

more elastic demands

a tax is placed on the sellers of a produce, buyers pay

more, and sellers receive less than they did before the tax

suppose goods A and B are substitutes for each other. we would expect the cross-price elasticity between these goods to be

positive

if a change in the price of a good results in no change in total revenue, then

the demand for the good must be elastic

when demand is perfectly inelastic, the demand curve will be

vertical, because buyers purchase the same amount as before whenever the price rises or falls