Micro Test 2
Erin would be willing to pay as much as $100 per week to have her house cleaned. Ernesto's opportunity cost of cleaning Erin's house is $70 per week If Ernesto cleans Erin's house for $90, Ernesto's producer surplus is ?
$20
Demand is unit elastic when quantity demanded changes from
$7- $84 $8- $88 $9- $90 $10- $90 . So it would be from $9 - $10 because the total revenue did not change even though the price did
If the price elasticity of demand for a good is 4, then a 12 percent decrease in price results in a
48 percent increase in the quantity demanded
When price is between $5 and $9, demand is $5- $70 $6- $78 $7- $84 $9- $90
Demand is inelastic because as the price changes between $5 and $9 so does the total revenue
The supply of aged cheddar cheese is inelastic, and the supply of bread is elastic. Both goods are considered to be normal goods by a majority of consumers. Suppose that a large income tac increase decrease the demand for both goods by 10%. The change in equilibrium price will be ?
Greater in the aged cheddar cheese market than in the bread market because the cheddar cheese is inelastic
The price elasticity of supply measures how responsive
Sellers are to change in price
For a particular good, a 3 percent increase in price causes a 10 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?
There are many close substitutes for this good
If T represents the size of the tax on a good and Q represents the quantity of the good that is sold, total tax revenue received by government can be expressed as
TxQ
One of the basic principles of economics is that markets are usually a good way to organize economic activity. This principle is explained by the study of
Welfare economics
Producer surplus equals the
amount received by sellers minus the cost to sellers
Under rent control, bribery is a mechanism to
bring the total price of an apartment (including the bribe) closer to the equilibrium price.
the price elasticity of demand measures
buyers' responsiveness to a change in the price of a good
A legal maximum on the price at which a good can be sold is called a price
ceiling
The benefit to buyers of participating in a marker is measured by
consumer surplus
The price elasticity of demand for a good measures the willingness of
consumers to buy less of the good as price raises
The decrease in total surplus that results from a market distortion, such as tax, is called a
deadweight loss
consumer surplus
is measured using the demand curve for a product
The social security tax is a tax on
labor
Which of the following expressions represents a cross-price elasticity of demand?
percentage change in quantity demanded of bread divided by percentage change in price of butter
The presence of a price control in a market for a good or service usually is an indication that
policymakers believed that the price that prevailed in that market in the absence of price controls was unfair to buyers or sellers
A legal minimum on the price at which a good can be sold is called a
price floor
The minimum wage is an example of a
price floor
The price of elasticity of demand measures how much
quantity demanded responds to a change in price
The price elasticity of supply measures how responsive
sellers are to a change in price
a payroll tax is a
tax on the wages that firms pay their workers
Consumer surplus is the
the amount a consumer is willing to pay less the amount the consumer actually pays
Producer surplus directly measures
the well-being of sellers
Economics typically measure efficiency using
total surplus
The minimum wage does not apply to
unpaid internships
The price elasticity of demand for mobile phones
will be lower if consumers perceive mobile phones to be a necessity