Elasticities
Taxes/Subsidies
Price controls
Negative externalities
Positive externalities
100
The responsiveness of quantity demanded by consumers to a change in price
What is price elasticity of demand
100
Specific and ad valorem
What are two forms of indirect taxes?
100
Maximum legally allowable price for goods set by the government.
What is a price ceiling?
100
Any situation where the allocation of resources by a free market is not efficient.
What is market failure?
100
Planting trees for peach cultivation?
What is an example of a positive externality?
200
(percentage change in quantity demanded of good X)/(percentage change in price of good Y)
What is the equation to calculate cross-price elasticity of demand
200
Shifts the supply to the right
What is the effect of a subsidy in a diagram
200
A minimum legally allowable price for a good set by the government.
What is a price floor?
200
A transaction where someone other than the buyer or seller experiences benefit or loss as a result of the transaction.
What is an externality?
200
Merit Good
Goods whose consumption creates external benefit.
300
Substitutes, Proportion of income, Luxury or necessity, Addictive or not, Time to respond
What are the determinants of PED
300
Elasticity of demand relative to supply
Explain what determines whether producers or consumers pay the larger shares of the tax
300
A market that contradicts the purpose of a price floor.
What are informal markets?
300
Utility or benefit derived from the use of a good including benefits to the consumer and the rest of society.
What is marginal social benefit?
400
The amount of time following a change in price, the mobility of factors of production, the ability to store stocks, the amount of unused capacity.
What are the determinants of price elasticity of supply?
400
A measure of the consequences of a tax on all the affected parties.
What is a tax incidence?
400
A fixed amount of commodity allowed to each person during a shortage.
What is rationing?
400
Legislation and regulation, taxation, advertisement and persuasion
What are potential solutions?
500
A tax on a particular good is paid by both the producers and the consumers of the good.
What is an excise tax?
500
Government giving money to a certain industry to lower its costs of production.
What is an example of a subsidy?
500
Rent control
What is an example of a price ceiling?
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