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Exam two Econ

question
Elasticity
answer
a measure of the responsiveness of quantity demanded or quantity supplied to a change in one of its determinants
question
Inelastic
answer
Describes demand that is not very sensitive to a change in price
question
elastic
answer
describes demand that is very sensitive to a change in price
question
Perfectly inelastic line on graph would be
answer
Vertical
question
Perfectly elastic line on a graph would be
answer
horizontal
question
How to find percentage change in quantity
answer
Q2-Q1/(Q2+Q1/2) x100
question
How to find percentage change in price
answer
P2-P1/(Q2+Q1/2)x100
question
How to calculate Price elasticity of demand
answer
%change in quantity demanded/%change in price
question
If the percentage is less than 1 then it is...
answer
Inelastic
question
If the percentage is more than one it is...
answer
Elastic
question
If the product is inelastic, should prices increase or decrease
answer
increase
question
cross-price elasticity of demand
answer
a measure of how much the quantity demanded of one good responds to a change in the price of another good
question
How to calculate cross price elasticity of demand
answer
% change in quantity demanded/ % change in price of another good
question
if cross price elasticity is positive
answer
goods are substitutes
question
if cross price elasticity is negative
answer
goods are complements
question
When measuring the change in income, if the percent change is positive it is...
answer
a normal good
question
When measuring the change in income, if the percent change is negative it is...
answer
an inferior good
question
The price elasticity of supply measures what...
answer
how responsive the sellers are to price changes
question
The larger the percentage change in quantity supplied means what?
answer
the more responsive sellers are to price changes
question
If the tax is on sellers, the supply curve shifts where?
answer
to the left
question
a tax leads to a decrease or increase
answer
decrease
question
Tax on buyers leads to a shift to the
answer
left on the demand curve
question
Who bears the Economic Burden of a tax?
answer
both buyers and sellers no matter who the tax is on
question
what is economic burden
answer
the burden created by the change in the after-tax prices faced by buyers and sellers
question
Tax incidence
answer
the division of economic burden of a tax between buyers and sellers
question
If it is more inelastic then buyers pay more or less tax
answer
more tax
question
if its more elastic, then the sellers pay more or less tax
answer
sellers pay more tax
question
subsidies
answer
a sum of money granted by the government
question
Price ceiling
answer
maximum on the price at which a good can be sold
question
Price floor
answer
minimum on the price at which a good can be sold
question
Quota
answer
A limit placed on the quantities of a product that can be imported
question
Mandate
answer
a requirement to buy or sell a minimum amount of good
question
positive analysis
answer
analysis concerned with what is, explaining why or predicting what will happen
question
normative analysis
answer
analysis concerned with what should happen
question
what is economic surplus
answer
the total benefits minus total costs from a decision
question
what is economic efficiency
answer
the more economic surplus that is generated, the more efficient in the outcome
question
Consumer surplus
answer
the economic surplus you get from buying something
question
how to calculate consumer surplus
answer
Marginal benefit- Price
question
Area of a triangle
answer
1/2 (base)(height)
question
Voluntary exchange
answer
buyers and sellers exchange money for goods only if they both want to
question
How do you calculate economic surplus
answer
add consumer surplus and producer surplus
question
what are the five sources of market failure
answer
Market power, Externalities, information problems, irrationality, government regulations
question
What is deadweight loss?
answer
economic loss
question
How do you calculate deadweight loss
answer
economic surplus- actual economic surplus
question
Comparative advantage
answer
the ability to do a task at a lower opportunity cost
question
absolute advantage
answer
the ability to produce a good using fewer inputs than another producer
question
opportunity cost equation
answer
hours this task takes/ Hours required to complete an alternative task
question
If you have the lower opportunity cost do you have the comparative advantage
answer
yes
1 of 48
question
Elasticity
answer
a measure of the responsiveness of quantity demanded or quantity supplied to a change in one of its determinants
question
Inelastic
answer
Describes demand that is not very sensitive to a change in price
question
elastic
answer
describes demand that is very sensitive to a change in price
question
Perfectly inelastic line on graph would be
answer
Vertical
question
Perfectly elastic line on a graph would be
answer
horizontal
question
How to find percentage change in quantity
answer
Q2-Q1/(Q2+Q1/2) x100
question
How to find percentage change in price
answer
P2-P1/(Q2+Q1/2)x100
question
How to calculate Price elasticity of demand
answer
%change in quantity demanded/%change in price
question
If the percentage is less than 1 then it is...
answer
Inelastic
question
If the percentage is more than one it is...
answer
Elastic
question
If the product is inelastic, should prices increase or decrease
answer
increase
question
cross-price elasticity of demand
answer
a measure of how much the quantity demanded of one good responds to a change in the price of another good
question
How to calculate cross price elasticity of demand
answer
% change in quantity demanded/ % change in price of another good
question
if cross price elasticity is positive
answer
goods are substitutes
question
if cross price elasticity is negative
answer
goods are complements
question
When measuring the change in income, if the percent change is positive it is...
answer
a normal good
question
When measuring the change in income, if the percent change is negative it is...
answer
an inferior good
question
The price elasticity of supply measures what...
answer
how responsive the sellers are to price changes
question
The larger the percentage change in quantity supplied means what?
answer
the more responsive sellers are to price changes
question
If the tax is on sellers, the supply curve shifts where?
answer
to the left
question
a tax leads to a decrease or increase
answer
decrease
question
Tax on buyers leads to a shift to the
answer
left on the demand curve
question
Who bears the Economic Burden of a tax?
answer
both buyers and sellers no matter who the tax is on
question
what is economic burden
answer
the burden created by the change in the after-tax prices faced by buyers and sellers
question
Tax incidence
answer
the division of economic burden of a tax between buyers and sellers
question
If it is more inelastic then buyers pay more or less tax
answer
more tax
question
if its more elastic, then the sellers pay more or less tax
answer
sellers pay more tax
question
subsidies
answer
a sum of money granted by the government
question
Price ceiling
answer
maximum on the price at which a good can be sold
question
Price floor
answer
minimum on the price at which a good can be sold
question
Quota
answer
A limit placed on the quantities of a product that can be imported
question
Mandate
answer
a requirement to buy or sell a minimum amount of good
question
positive analysis
answer
analysis concerned with what is, explaining why or predicting what will happen
question
normative analysis
answer
analysis concerned with what should happen
question
what is economic surplus
answer
the total benefits minus total costs from a decision
question
what is economic efficiency
answer
the more economic surplus that is generated, the more efficient in the outcome
question
Consumer surplus
answer
the economic surplus you get from buying something
question
how to calculate consumer surplus
answer
Marginal benefit- Price
question
Area of a triangle
answer
1/2 (base)(height)
question
Voluntary exchange
answer
buyers and sellers exchange money for goods only if they both want to
question
How do you calculate economic surplus
answer
add consumer surplus and producer surplus
question
what are the five sources of market failure
answer
Market power, Externalities, information problems, irrationality, government regulations
question
What is deadweight loss?
answer
economic loss
question
How do you calculate deadweight loss
answer
economic surplus- actual economic surplus
question
Comparative advantage
answer
the ability to do a task at a lower opportunity cost
question
absolute advantage
answer
the ability to produce a good using fewer inputs than another producer
question
opportunity cost equation
answer
hours this task takes/ Hours required to complete an alternative task
question
If you have the lower opportunity cost do you have the comparative advantage
answer
yes
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