general
According to the law of supply, as the price of a good increases, the quantity supplied ___________.
increases
According to the law of demand, as the price decreases, the quantity demanded ___________.
increases.
What is the definition of price elasticity of demand
A binding price ceiling is __________ market equilibrium.
below
If Quantity demanded is larger than Quantity supplied, is there a shortage or surplus?
shortage
In the market for cars, there has been technological advancement that makes it easier and cheaper to assemble them.
Where does supply shift?
Supply would shift out (or to the right)
The price of Crunch bars decrease. What happens in the market for Kit-Kats? (Which way does demand shift)
Demand shifts left (or decreases)
If demand is inelastic, a change in price will result in how much of a change in quantity demanded?
relatively less change in Qd
If there is a price floor above market equilibrium, is there a shortage or surplus?
surplus
if the world price is above domestic price equilibrium, will we import or export?
We will expert at this price.
There is a hurricane close to Florida. What would happen in the market for oranges?
Supply shifts to the left and prices increase because many oranges will be destroyed, reducing the quantity available.
If a subsidy is added to the market for vaccines, how will that change the price consumers pay?
Consumers will pay a lower price with the addition of a subsidy
If a tax is added on an inelastic good who will have more of a burden of the tax
consumers
A binding price floor is __________ market equilibrium.
above
If a tariff is added to a market that NZ imports in what will happen to consumer surplus
It will decrease as consumers buy less units and for a higher price
A tax is added to the market for oranges, what will happen to consumer surplus
Consumer surplus will decrease
what are the reasons for an increase in consumer surplus when a subsidy is added
Consumers will pay a lower price
There are more units on which to gain a surplus at the new equilibrium
Will a subsidy on housing be more or less effective than a subsidy on apples in increasing quantity
Subsidy on apples will be more effective at increasing quantity because housing demand is very inelastic
There is a price ceiling below market equilibrium.
indicate whether this ceiling is binding
Yes
If we are importers of cars, and a tariff is added, what will happen to producer surplus
it will increase as domestic producers are able to compete more
Why is adding a tax not allocatively efficient in the market for oranges. Specific wording needed
The losses in consumer and producer surpluses are not fully offset by the gain in tax revenue
Why is allocative efficiency not achieved when a subsidy is added?
The cost of the subsidy is not fully offset by the gains in producer and consumer surpluses
If a good has perfectly inelastic demand, what will be the percentage change in QD if the price increases 4% due to a tax
Qd will not change
What happens to producer surplus when there is a maximum price added to housing.
Decreases
If a quota is added on petrol cars in NZ what will happen to their price
price will increase (assuming it is below previous Qe)