Supply and Demand
This is the market condition in which quantity demanded equals quantity supplied.
What is market equilibrium?
This term means the maximum price a consumer would pay for a good.
What is willingness to pay?
Rent control sets a legal maximum rent, making it this type of price control.
What is a price ceiling?
This economic concept measures how responsive quantity demanded or supplied is to a change in price.
What is price elasticity?
A tax charged on each unit of a good or service sold is called this.
What is an excise tax?
Coffee and tea are these types of goods if a rise in the price of coffee increases demand for tea.
What are substitutes?
You would pay up to $50 for a concert ticket but buy it for $35. This is your consumer surplus.
What is $15?
In the competitive-market model, a binding price floor creates this condition because quantity supplied exceeds quantity demanded.
What is a surplus?
Demand receives this classification when its price elasticity is greater than 1.
What is elastic demand?
A tax that takes a larger percentage of income from high-income taxpayers than from low-income taxpayers has this classification.
What is a progressive tax?
A pizza shop lowers its pizza prices, and customers buy more pizzas. This is a movement along this curve.
What is the demand curve?
A seller’s minimum acceptable price for a used textbook is $12. The seller receives $30, earning this amount of producer surplus.
What is $18?
At a legally imposed price ceiling, buyers demand 900 units and sellers supply 600 units. This is the size of the shortage.
What is 300 units?
A 10% increase in price causes a 20% decrease in quantity demanded. This is the price elasticity of demand, expressed as a positive number.
What is 2?
A $4-per-unit tax is imposed, and 500 units are sold after the tax. The government collects this amount of tax revenue.
What is $2,000?
A new technology lowers the cost of producing bicycles. With demand unchanged, equilibrium price and equilibrium quantity move in these two directions.
What are a decrease in equilibrium price and an increase in equilibrium quantity?
On a supply-and-demand graph, total consumer surplus lies below this curve and above the market price, up to the quantity purchased.
What is the demand curve?
The equilibrium price is $20, but the government sets a price ceiling of $25. Economists describe that ceiling with this term because it does not constrain the market.
What is nonbinding?
A business raises its price and finds that its total revenue increases. Assuming other factors are unchanged, demand over that price range has this classification.
What is inelastic demand?
Demand is much less price-elastic than supply. These market participants bear the larger share of an excise tax, regardless of who sends the payment to the government.
Who are consumers/buyers?
Demand for a good increases while its supply decreases. This happens to equilibrium price, while the change in equilibrium quantity remains uncertain.
What is an increase in equilibrium price?
A buyer values a textbook at $60, and a seller’s opportunity cost is $20. Preventing their trade eliminates this amount of total surplus, regardless of the price they would have agreed on.
What is $40?
At a binding quota limit, buyers will pay $8 per unit, while suppliers require $5 per unit. The license holder earns this amount of quota rent per unit.
What is $3 per unit?
Price rises from $8 to $12, and quantity demanded falls from 120 to 80. Using the midpoint method, demand has this elasticity value and classification.
What is an elasticity of 1, or unit-elastic demand?
In a competitive market with no externalities, an excise tax leaves the quantity traded unchanged because demand is perfectly inelastic. Ignoring administrative costs, the tax creates this amount of deadweight loss.
What is zero?