measures how responsive the quantity supplied is to the a change in price
What is elasticity of supply
100
insulin has a _________ demand, because it is __________
What is inelastic; a necessity
100
as a buyer, would you bear the burden more if your demand for a good was elastic or inelastic
inelastic
100
deadweight loss is greatest when
supply and demand are very elastic
100
A binding price ceiling causes this
What is a shortage
200
a 4% increase in the price of beer will cause a 1% decrease in the quantity demanded. the demand is
What is inelastic
200
for elasticity of demand more responsive =
What is more elastic
200
in the market for good X, a necessity good with no good substitutes, the workers and capital in the industry can easily find work producing other goods. the burden of the tax is likely to fall:
more heavily on buyers
200
the lower the price ceiling the _________
larger the shortage
200
in free markets, surpluses lead to
What is lower prices
300
price elasticity of demand is 3. in order to increase revenue, the firm should
What is decrease price
300
cross price elasticity is what for substitutes and complements
negative for complements and positive for substitutes
300
Consider the market for gasoline, a good with a relatively low elasticity of demand. who will bear the majority of a tax imposed on gasoline?
buyers
300
during the video on gas prices we watched in class, what caused the shortage of gas?
What is hurricane sandy and a price ceiling
300
legally established maximum price that can be charged for a good
What is price ceiling
400
what happens to the elasticities of demand and supply in the long run
What is both become more elastic
400
the income for the population increased by 5% over the last year and the quantity demanded for paper plates decreased by 15%. what is the income elasticity for paper plates and what type of good is it
What is -3 and inferior good
400
Which of the following statements is TRUE?
I. subsidizing buyers is no different from subsidizing sellers
II. Unlike taxes, subsidies do not create deadweight losses
III. subsidies are payments the government makes to either producers or consumers
IV. taxpayers pay for subsidies
I, II, IV
400
a binding price ceiling is shown by
a horizontal line across the graph below equilibrium
400
rent control is an example of what
binding price ceiling
500
what is more elastic the demand for sun glasses or the demand for ray bans
the demand for ray bans
500
which will be more elastic for demand, black pepper or houses?
houses will be more elastic (more share of budget)
500
which form of taxation hurts apple growers more: a $1 per bushel production tax or a $1 per bushel consumption tax
each tax hurts the apple grower equally
500
rent controls cause what to happen to the quality of apartments
lower quality
500
why do price ceilings result in lost gains from trade?
buyers and sellers want to trade at the equilibrium price so there is not a shortage but the threat of breaking the law keeps them from this