Micro test 2
(Q2-Q1)/[(Q2+Q1/)/2] (P2-P1)/[(P2+P2)/2]
Mid point formula
Maximum amount that a buyer will pay for a good
Willingness to pay measures the...
analyze supply and demand with greater precision
the concept of elasticity is used to
greater the responsiveness of quantity demanded to price
the greater the price elasticity of demand the
increase the price
the local pizza restaurant makes such great bread sticks that consumers do not respond much to a change in price. if the owner is only interested in increasing revenue, he should?
consumers are to move away from the good as price rises.
the price elasticity of demand for a good measures how willing
Buyers are to a change in the price
the price elasticity of demand measures how responsive
a necessity
this is a good that is inelastic
price controls
usually enacted when policymakers believe that the market price of a good or service is unfair to buyers or sellers
how the allocation of resources affects economic well being
welfare economics is the study of
price
which of the following is not a determinant of the price elasticity of demand for a product
luxury
which of the following would you expect to have the highest income elasticity of demand
Percent change in quantity demanded divided by the percent change in the price
economist compute the price elasticity of demand as the
small income elasticities because consumers, regardless of their incomes, choose to buy these goods.
food and clothing tend to have
byeres tend to be much more sensitive to a change in the price when given more time to react
holding all other forces constant, when the price of gasoline rises, the number of gallons of gasoline demanded would fall substantially over a ten year period because?
it first increases, then decreases
how does total revenue change as one moves down a linear demand curve
Inelastic
if a good is a necessity, demand for the good would tend to be?
below the ceiling
if a price ceiling is not binding the equilibrium price is
an inferior good
if an increase in income results in a decrease in the quantity demanded of a good, then the good is?
Price * Quantity
in any market, total revenue is what formula
OPEC raised the price of crude oil in world markets. Gov imposed price ceiling
in the 1970s long lines at gas stations in the US were primarily a result of the fact that
the quantity demanded changes as consumer income changes
income elasticity of demand measures how
Elasticity
A measure of how much buyers and sellers respond to changes in market conditions
Price ceiling
a legal maximum price at which a good can be sold is a
Price floor
a legal minimum on the price at which a good can be sold
horizontal
a perfectly elastic demand curve will be
vertical, because buyers purchase the same amount whether the price rises or falls
a perfectly inelastic demand curve will be
it is set below equilibrium price
a price ceiling will only be binding if
greater than 1
demand is elastic if elasticity is?
Less than 1
demand is inelastic if elasticity is
the quantity demanded respond substantially to the changes in the price of the good
demand is said to be elastic if
the quantity demanded changes slightly when the price of the good changes.
demand is said to be inelastic if
equal to 1
demand is unit elastic if elasticity is
