Assignment #7: Taxation and Elasticity (10 Points)
|
|
- Gary Fisher
- 7 years ago
- Views:
Transcription
1 Assignment #7: Taxation and Elasticity (10 Points) Terms and Definitions: Define the following terms Demand Elasticity: Excise Tax: Marginal Tax Rate: Supply Elasticity: Tariff: Tax Burden: Discussion Questions: 1. Suppose you are deciding which tax structure the United States will use to tax incomes. Which tax structure would you choose and why? 2. Explain what is meant by the term tax burden, and explain why a supplier who physically pays an excise tax to the government does not incur the entire burden of the tax.
2 3. Using the concept of tax burden, explain how a tax increase to the rich (business owners/corporations) will effect everyone, not just the rich and businesses who are paying the tax. Short Answer Questions: 1. Explain how taxation is used for each of the following reasons. a. Repricing: b. Redistribution: c. Revenue: Use the tax tables below to answer the following questions: Tax Structure A Marginal Income Tax Rate 0 - $8,350 10% $8,351 - $33,950 15% $33,951 - $82,250 25% $82,251 - $171,550 28% $171,551 - $372,950 33% $372, % Tax Structure B Marginal Income Tax Rate 0 - $8,350 20% $8,351 - $33,950 20% $33,951 - $82,250 20% $82,251 - $171,550 20% $171,551 - $372,950 20% $372, % Tax Structure C Marginal Income Tax Rate 0 - $8,350 35% $8,351 - $33,950 33% $33,951 - $82,250 28% $82,251 - $171,550 25% $171,551 - $372,950 15% $372, % 2. Complete each sentence by filling in the blank with the appropriate term (progressive, regressive, or flat). a. Tax structure A is a tax rate. b. Tax structure B is a tax rate. c. Tax structure C is a tax rate. 3. Calculate how much income tax you would have to pay for the following amounts using tax structure A. a. Income tax on $400,000 is
3 b. Income tax on $35,000 is 4. Calculate how much income tax you would have to pay for the following amounts using tax structure B. a. Income tax on $400,000 is b. Income tax on $35,000 is 5. Calculate how much income tax you would have to pay for the following amounts using tax structure C. a. Income tax on $400,000 is b. Income tax on $35,000 is 6. Suppose the government imposes an excise tax on the production of cigarettes of $10.00 per carton. Calculate the tax burden to both consumers and producers given the following elasticities. a. Elasticity of demand = 1.5 Elasticity of supply = 0.5 Consumers tax burden = Producers tax burden = b. Elasticity of demand = 1.5 Elasticity of supply = 2.5 Consumers tax burden = Producers tax burden = c. Elasticity of demand = 3 Elasticity of supply = 2 Consumers tax burden = Producers tax burden = Part 2: Understanding Elasticity Multiple Choice 1. Price elasticity of demand is the: A) change in the quantity of a good demanded divided by the change in the price of that good. B) change in the price of a good divided by the change in the quantity of that good demanded. C) percentage change in price of that good divided by the percentage change in the quantity of that good demanded. D) percentage change in quantity of a good demanded divided by the percentage change in the price of that good. 2. In general, the greater the elasticity the: A) smaller the responsiveness of price to changes in quantity. B) smaller the responsiveness of quantity to changes in price. C) larger the responsiveness of price to changes in quantity. D) larger the responsiveness of quantity to changes in price.
4 3. In 2004, the Wall Street Journal reported that Starbucks was set to raise some of its prices. The article stated that unlike Starbucks, "mass-market grocery brands such as Kraft Foods Inc.'s Folgers and Maxwell House coffees tend to be much more price-elastic." Which of the following best explains the implications of this quotation? A) When Starbucks raises prices, it causes sales of Folgers and Maxwell House to rise a lot. B) When Starbucks raises prices, it causes sales of Folgers and Maxwell House to fall a lot. C) When the price of Folgers or Maxwell House coffee rises, consumers buy only slightly less. D) When the price of Folgers or Maxwell House coffee rises, consumers buy a lot less. 4. If quantity demanded falls by 25 percent when price rises by 50 percent, demand is said to be: A) elastic. B) inelastic. C) proportional. D) responsive. 5. The short-run elasticity of demand for gasoline sold at gasoline stations is If terrorism causes the supply of gasoline to fall, resulting in a 5 percent drop in quantity, other things the same, the price per gallon will increase by: A) 4 percent. B) 5 percent. C) 20 percent. D) 25 percent. 6. According to Exhibitor Relations Co., between 2003 and 2004, average movie ticket prices rose by about 3.58 percent and attendance fell by about 1.66 percent. Other things equal, the data imply that the elasticity of demand for movie tickets is about: A) B) C) D) According to Exhibitor Relations Co., in 2003 average movie ticket prices were $6.03 and attendance was 243 million; in 2004, average movie ticket prices were $6.25 and attendance was 239 million. Other things equal, the data imply that the elasticity of demand for movie tickets is about: A) B) C) D) A newspaper recently lowered its price from 50 cents to 30 cents, causing the number of newspapers sold to increase from 240,000 to 280,000. Other things equal, the data imply that the elasticity of demand for this newspaper is about: A) B) 0.5. C) 0.3. D) If a $100 drop in the price of a $10,000 car resulted in an increase in the quantity of cars purchased from 100 to 110 and a $100 drop in the price of a $1000 vacation rental resulted in an increase in the quantity of weekly vacation homes rented from 100 to 110, the price elasticity of demand is: A) greater for the car. B) less for the car. C) the same for both the car and the vacation rental. D) not comparable.
5 Price A B C D Quantity 10. Refer to the graph above. The approximate elasticity of demand at point A is: A) 1/4 B) 4 C) 1 D) Refer to the graph above. The approximate elasticity of demand at point B is: A) 2 B) 1 C) 2/3 D) 3/2 12. Refer to the graph above. The approximate elasticity of demand at point C is: A) 2 B) 1 C) 2/3 D) 3/2 13. Refer to the graph above. The approximate elasticity of demand at point D is: A) 1/4 B) 1 C) 2/3 D) 3/2 14. If the elasticity of demand for restaurant meals is 2.27, the demand for restaurant meals is: A) elastic. B) inelastic. C) unitary elastic. D) perfectly inelastic.
6 Price A B C D E Quantity 15. Refer to the above graph. Which point has an elasticity greater than one? A) E B) B C) C D) D 16. Refer to the above graph. Which point has an elasticity less than one? A) A. B) B. C) C. D) D. 17. Which of the following most likely correctly orders goods from most to least demand elastic? A) cars, motor transportation, transportation. B) transportation, bicycles, non-motor transportation. C) brand-name Advil, headache-relieving medicine, aspirin D) headache-relieving medicine, brand-name Advil, aspirin 18. For which of the following goods is the demand curve likely to be most inelastic? A) Hershey's Symphony chocolate bar. B) Chocolate bars with nuts. C) Candy. D) Chocolate bars. 19. When the price of coffee beans rises, the price of lower-grade coffees tend to rise by more than the increase in the price of gourmet coffees. The possible explanation for this is: A) Low-grade coffee is less price elastic since it has more substitutes. B) Low-grade coffee is more price elastic since it is a necessity. C) Gourmet coffee is more price elastic since it is a luxury and has more substitutes. D) Gourmet coffee is less price elastic since it is a luxury and has fewer substitutes. 20. If elasticity is greater than one, A) a rise in price lowers total revenue. B) a decline in price will not change total revenue. C) a rise in price increases total revenue. D) a decline in price lowers total revenue. 21. Income elasticity is defined as the: A) change in demand divided by the change in income. B) percentage change in demand divided by the percentage change in income. C) change in income divided by the change in demand. D) percentage change in income divided by the percentage change in demand.
7 22. Cross-price elasticity of demand is defined as the: A) percentage change in quantity demanded divided by percentage change in the price of the same good. B) percentage change in demand divided by percentage change in the price of another good. C) change in the price of another good divided by the change in quantity demanded. D) percentage change the price of another good divided by the percentage change in quantity demanded. 23. For normal goods, income elasticity is: A) greater than 0. B) greater than 1. C) less than 0. D) equal to Kuo S. Huang estimates that with every 20% increase in income, the quantity of grapes purchased rises by 11.2%. From this information one would conclude that grapes are: A) a luxury. B) not demanded. C) an inferior good. D) a normal good. 25. For luxuries, income elasticity is: A) greater than 0. B) greater than 1. C) less than 0. D) equal to Kuo S. Huang estimates that with every 15% increase income, the quantity of turkey purchased declines by 1.8%. From this information one would conclude that turkey is: A) a luxury. B) a necessity. C) an inferior good. D) a normal good. 27. For necessities, income elasticity is any value: A) greater than 0. B) greater than 1. C) less than 0. D) between 0 and It is estimated that a 10% decline in income will reduce cigarette smoking by 1.4%. From this information one can conclude that cigarettes are: A) a luxury. B) a necessity. C) an inferior good. D) a large portion of one's budget. 29. For complements: A) cross price elasticity of demand is negative. B) cross price elasticity of demand is positive. C) price elasticity of income is negative. D) price elasticity of income is positive. 30. It is estimated that a 3% drop in the price of Asian and European autos will decrease the demand for American cars by.84%. From this information one can conclude that: A) The income elasticity of demand for American cars is less than one. B) European and Asian cars are luxuries. C) European and Asian cars are substitutes for American cars. D) European and Asian cars are complements for American cars.
Solution of Economics HW2 Fall Term 2014 Answer:
Solution of Economics HW2 Fall Term 2014 1. Consider the market for minivans. For each of the event listed here, identify which of the determinants of demand or supply are affected. Also indicate whether
More information6. In general, over longer periods, demand tends to become (A) More elastic (B) Perfectly elastic (C) Perfectly inelastic (D) Less elastic
5. The demand for a good is said to be inelastic if (A) More units will be purchased if price increases (B) The percentage change in quantity demanded is greater than the percentage in price (C) The demand
More information1. If the price elasticity of demand for a good is.75, the demand for the good can be described as: A) normal. B) elastic. C) inferior. D) inelastic.
Chapter 20: Demand and Supply: Elasticities and Applications Extra Multiple Choice Questions for Review 1. If the price elasticity of demand for a good is.75, the demand for the good can be described as:
More informationhttp://ezto.mhecloud.mcgraw-hill.com/hm.tpx
Page 1 of 17 1. Assume the price elasticity of demand for U.S. Frisbee Co. Frisbees is 0.5. If the company increases the price of each Frisbee from $12 to $16, the number of Frisbees demanded will Decrease
More informationChapter 6. Elasticity: The Responsiveness of Demand and Supply
Chapter 6. Elasticity: The Responsiveness of Demand and Supply Instructor: JINKOOK LEE Department of Economics / Texas A&M University ECON 202 504 Principles of Microeconomics Elasticity Demand curve:
More informationMidterm Exam #2. ECON 101, Section 2 summer 2004 Ying Gao. 1. Print your name and student ID number at the top of this cover sheet.
NAME: STUDENT ID: Midterm Exam #2 ECON 101, Section 2 summer 2004 Ying Gao Instructions Please read carefully! 1. Print your name and student ID number at the top of this cover sheet. 2. Check that your
More informationChapter 5 Elasticity of Demand and Supply. These slides supplement the textbook, but should not replace reading the textbook
Chapter 5 Elasticity of Demand and Supply These slides supplement the textbook, but should not replace reading the textbook 1 What is total revenue? Price multiplied by the quantity sold at that price
More informationa. Meaning: The amount (as a percentage of total) that quantity demanded changes as price changes. b. Factors that make demand more price elastic
Things to know about elasticity. 1. Price elasticity of demand a. Meaning: The amount (as a percentage of total) that quantity demanded changes as price changes. b. Factors that make demand more price
More informationThe formula to measure the rice elastici coefficient is Percentage change in quantity demanded E= Percentage change in price
a CHAPTER 6: ELASTICITY, CONSUMER SURPLUS, AND PRODUCER SURPLUS Introduction Consumer responses to changes in prices, incomes, and prices of related products can be explained by the concept of elasticity.
More informationQuantity of trips supplied (millions)
Taxes chapter: 7 1. The United tates imposes an excise tax on the sale of domestic airline tickets. Let s assume that in 2010 the total excise tax was $6.10 per airline ticket (consisting of the $3.60
More informationElasticity: The Responsiveness of Demand and Supply
Chapter 6 Elasticity: The Responsiveness of Demand and Supply Chapter Outline 61 LEARNING OBJECTIVE 61 The Price Elasticity of Demand and Its Measurement Learning Objective 1 Define the price elasticity
More informationPAGE 1. Econ 2113 - Test 2 Fall 2003 Dr. Rupp. Multiple Choice. 1. The price elasticity of demand measures
PAGE 1 Econ 2113 - Test 2 Fall 2003 Dr. Rupp Multiple Choice 1. The price elasticity of demand measures a. how responsive buyers are to a change in income. b. how responsive sellers are to a change in
More information17. Suppose demand is given by Q d = 400 15P + I, where Q d is quantity demanded, P is. I = 100, equilibrium quantity is A) 15 B) 20 C) 25 D) 30
Ch. 2 1. A relationship that shows the quantity of goods that consumers are willing to buy at different prices is the A) elasticity B) market demand curve C) market supply curve D) market equilibrium 2.
More informationPractice Exam 1. 1. Economics is the study of choice under conditions of a. demand b. supply c. scarcity d. opportunity e.
Practice Exam 1 1. Economics is the study of choice under conditions of a. demand b. supply c. scarcity d. opportunity e. abundance 2. Suppose your friends take you out for dinner on your birthday and
More information2011 Pearson Education. Elasticities of Demand and Supply: Today add elasticity and slope, cross elasticities
2011 Pearson Education Elasticities of Demand and Supply: Today add elasticity and slope, cross elasticities What Determines Elasticity? Influences on the price elasticity of demand fall into two categories:
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
MBA 640 Survey of Microeconomics Fall 2006, Quiz 6 Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) A monopoly is best defined as a firm that
More informationChapter 3 Market Demand, Supply and Elasticity
Chapter 3 Market Demand, Supply and Elasticity Multiple Choice Questions Choose the one alternative that best completes the statement or answers the question. 1. Ceteris paribus means (a) other things
More informationElasticities of Demand and Supply
1 CHAPTER CHECKLIST Elasticities of Demand and Supply Chapter 5 1. Define, explain the factors that influence, and calculate the price elasticity of demand. 2. Define, explain the factors that influence,
More informationDEMAND AND SUPPLY. Chapter. Markets and Prices. Demand. C) the price of a hot dog minus the price of a hamburger.
Chapter 3 DEMAND AND SUPPLY Markets and Prices Topic: Price and Opportunity Cost 1) A relative price is A) the slope of the demand curve B) the difference between one price and another C) the slope of
More informationMICROECONOMIC PRINCIPLES SPRING 2001 MIDTERM ONE -- Answers. February 16, 2001. Table One Labor Hours Needed to Make 1 Pounds Produced in 20 Hours
MICROECONOMIC PRINCIPLES SPRING 1 MIDTERM ONE -- Answers February 1, 1 Multiple Choice. ( points each) Circle the correct response and write one or two sentences to explain your choice. Use graphs as appropriate.
More informationCHAPTER 4 ELASTICITY
CHAPTER 4 ELASTICITY Chapter in a Nutshell When economists use the word elasticity, they mean sensitivity. Price elasticity of demand is a measure of buyers sensitivity to price changes. The elasticity
More informationOVERVIEW. 2. If demand is vertical, demand is perfectly inelastic. Every change in price brings no change in quantity.
7 PRICE ELASTICITY OVERVIEW 1. The elasticity of demand measures the responsiveness of 1 the buyer to a change in price. The coefficient of price elasticity is the percentage change in quantity divided
More informationELASTICITY Microeconomics in Context (Goodwin, et al.), 3 rd Edition
Chapter 4 ELASTICITY Microeconomics in Context (Goodwin, et al.), 3 rd Edition Chapter Overview This chapter continues dealing with the demand and supply curves we learned about in Chapter 3. You will
More informationChapter 4 Elasticities of demand and supply. The price elasticity of demand
Chapter 4 Elasticities of demand and supply The price elasticity of demand measures the sensitivity of the quantity demanded of a good to a change in its price It is defined as: % change in quantity demanded
More informationSUPPLY AND DEMAND : HOW MARKETS WORK
SUPPLY AND DEMAND : HOW MARKETS WORK Chapter 4 : The Market Forces of and and demand are the two words that economists use most often. and demand are the forces that make market economies work. Modern
More informationI. Introduction to Taxation
University of Pacific-Economics 53 Lecture Notes #17 I. Introduction to Taxation Government plays an important role in most modern economies. In the United States, the role of the government extends from
More information4 ELASTICITY. Chapter. Price Elasticity of Demand. A) more elastic. B) less elastic. C) neither more nor less elastic. D) undefined.
Chapter 4 ELASTICITY Price Elasticity of Demand Topic: The Price Elasticity of Demand 1) The slope of a demand curve depends on A) the units used to measure price and the units used to measure quantity.
More informationElasticity. Definition of the Price Elasticity of Demand: Formula for Elasticity: Types of Elasticity:
Elasticity efinition of the Elasticity of emand: The law of demand states that the quantity demanded of a good will vary inversely with the price of the good during a given time period, but it does not
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Hint: draw graphs in the margins to check your answers. And remember that an increase in
More informationPractice Questions Week 3 Day 1
Practice Questions Week 3 Day 1 Figure 4-1 Quantity Demanded $ 2 18 3 $ 4 14 4 $ 6 10 5 $ 8 6 6 $10 2 8 Price Per Pair Quantity Supplied 1. Figure 4-1 shows the supply and demand for socks. If a price
More informationFigure 4-1 Price Quantity Quantity Per Pair Demanded Supplied $ 2 18 3 $ 4 14 4 $ 6 10 5 $ 8 6 6 $10 2 8
Econ 101 Summer 2005 In-class Assignment 2 & HW3 MULTIPLE CHOICE 1. A government-imposed price ceiling set below the market's equilibrium price for a good will produce an excess supply of the good. a.
More informationChapter 3 Market Demand, Supply, and Elasticity
Chapter 3 Market Demand, Supply, and Elasticity After reading chapter 3, MARKET DEMAND, SUPPLY, AND ELASTICITY, you should be able to: Discuss the Law of Demand and draw a Demand Curve. Distinguish between
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Survey of Microeconomics, Quiz #1 Fall 2006 Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) A relative price is A) the number of dollars that
More informationGroup A (sales per week)
Practice Questions and Answers from Lesson I-7: Elasticity The following questions practice these skills: Use the midpoint method for calculating percent change. Compute price elasticity of demand. Identify
More informationELASTICITY. Answers to the Review Quizzes. Page 92
C h a p t e r 4 ELASTICITY Answers to the Review Quizzes Page 92 1. Why do we need a units-free measure of the responsiveness of the quantity demanded of a good or service to a change in its price? The
More informationConsumers face constraints on their choices because they have limited incomes.
Consumer Choice: the Demand Side of the Market Consumers face constraints on their choices because they have limited incomes. Wealthy and poor individuals have limited budgets relative to their desires.
More informationElasticity. I. What is Elasticity?
Elasticity I. What is Elasticity? The purpose of this section is to develop some general rules about elasticity, which may them be applied to the four different specific types of elasticity discussed in
More informationElasticity. Ratio of Percentage Changes. Elasticity and Its Application. Price Elasticity of Demand. Price Elasticity of Demand. Elasticity...
Elasticity and Its Application Chapter 5 All rights reserved. Copyright 21 by Harcourt, Inc. Requests for permission to make copies of any part of the work should be mailed to: Permissions Department,
More informationECON 103, 2008-2 ANSWERS TO HOME WORK ASSIGNMENTS
ECON 103, 2008-2 ANSWERS TO HOME WORK ASSIGNMENTS Due the Week of June 23 Chapter 8 WRITE [4] Use the demand schedule that follows to calculate total revenue and marginal revenue at each quantity. Plot
More informationHow to Study for Class 4: The Determinants of Demand and Supply
1 How to Study for Class 4: The Determinants of Demand and Supply Chapter 4 introduces the factors that will shift the shift plus two new elasticity concepts. 1. Begin by looking over the Objectives listed
More informationUniversity of Lethbridge - Department of Economics ECON 1010 - Introduction to Microeconomics Instructor: Michael G. Lanyi. Lab #4
University of Lethbridge - Department of Economics ECON 1010 - Introduction to Microeconomics Instructor: Michael G. Lanyi Lab #4 Chapter 4 Elasticity MULTIPLE CHOICE. Choose the one alternative that best
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Chapter 11 Monopoly practice Davidson spring2007 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) A monopoly industry is characterized by 1) A)
More informationA. a change in demand. B. a change in quantity demanded. C. a change in quantity supplied. D. unit elasticity. E. a change in average variable cost.
1. The supply of gasoline changes, causing the price of gasoline to change. The resulting movement from one point to another along the demand curve for gasoline is called A. a change in demand. B. a change
More informationSuppose you are a seller with cost 13 who must pay a sales tax of 15. What is the lowest price you can sell at and not lose money?
Experiment 3 Suppose that sellers pay a tax of 15. If a seller with cost 5 sells to a buyer with value 45 at a price of 25, the seller earns a profit of and the buyer earns a profit of. Suppose you are
More information6. Which of the following is likely to be the price elasticity of demand for food? a. 5.2 b. 2.6 c. 1.8 d. 0.3
Exercise 2 Multiple Choice Questions. Choose the best answer. 1. If a change in the price of a good causes no change in total revenue a. the demand for the good must be elastic. b. the demand for the good
More informationPrinciple of Microeconomics Econ 202-506 chapter 6
Principle of Microeconomics Econ 202-506 chapter 6 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The buyers pay the entire sales tax levied on
More informationCHAPTER 5 WORKING WITH SUPPLY AND DEMAND Microeconomics in Context (Goodwin, et al.), 2 nd Edition
CHAPTER 5 WORKING WITH SUPPLY AND DEMAND Microeconomics in Context (Goodwin, et al.), 2 nd Edition Chapter Overview This chapter continues dealing with the demand and supply curves we learned about in
More informationPre-Test Chapter 25 ed17
Pre-Test Chapter 25 ed17 Multiple Choice Questions 1. Refer to the above graph. An increase in the quantity of labor demanded (as distinct from an increase in demand) is shown by the: A. shift from labor
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The law of demand states that, other things remaining the same, the lower the price of a good,
More informationChapter 3 Demand and supply
Chapter 3 emand and supply emand is the amount of a product that consumers are willing and able to purchase at any given price. It is assumed that this is effective demand, i.e. it is backed by money and
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Chapter 4 - Elasticity - Sample Questions MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The slope of a demand curve depends on A) the units used
More information100 = 100 = 6.25% and since the change in price is 10%, the price elasticity of demand for group A is = 0.625
S87-S100_Krugman2e_PS_Ch06.qxp 9/16/08 9:20 PM Page S-87 Elasticity chapter: 6 1. Nile.com, the online bookseller, wants to increase its total revenue. One strategy is to offer a 10% discount on every
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Chapter 11 Perfect Competition - Sample Questions MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Perfect competition is an industry with A) a
More informationChapter 9: Perfect Competition
Chapter 9: Perfect Competition Perfect Competition Law of One Price Short-Run Equilibrium Long-Run Equilibrium Maximize Profit Market Equilibrium Constant- Cost Industry Increasing- Cost Industry Decreasing-
More informationNon Sequitur by Wiley Miller
SUPPLY & DEMAND Non Sequitur by Wiley Miller Graph Basics Movement change along the curve Shift the curve moves Increase to the right Decrease to the left Intersection of curves Price Label: both axis,
More informationPre-Test Chapter 18 ed17
Pre-Test Chapter 18 ed17 Multiple Choice Questions 1. (Consider This) Elastic demand is analogous to a and inelastic demand to a. A. normal wrench; socket wrench B. Ace bandage; firm rubber tie-down C.
More information3. CONCEPT OF ELASTICITY
3. CONCET OF ELASTICIT The quantity demanded of a good is affected mainly by - changes in the price of a good, - changes in price of other goods, - changes in income and c - changes in other relevant factors.
More informationChapter 4 Supply and Demand Macroeconomics In Context (Goodwin, et al.)
Chapter 4 Supply and Demand Macroeconomics In Context (Goodwin, et al.) Chapter Overview In this chapter, you ll find the basics of supply and demand analysis. As you work through this chapter, you will
More informationDemand and Supply. Demand and supply determine the quantities and prices of goods and services.
Demand and Supply Chapter CHAPTER CHECKLIST Demand and supply determine the quantities and prices of goods and services. Distinguish between quantity demanded and demand, and explain what determines demand.
More information14 : Elasticity of Supply
14 : Elasticity of Supply 1 Recap from Session Budget line and Consumer equilibrium Law of Equi Marginal utility Price, income and substitution effect Consumer Surplus Session Outline Elasticity of Supply
More informationEconomic Efficiency, Government Price Setting, and Taxes
CHAPTER 4 Economic Efficiency, Government Price Setting, and Taxes Modified by: Changwoo Nam 1 Economic Efficiency, Government Price Setting, and Taxes A legally determined maximum price that sellers may
More informationChapter 7 Monopoly, Oligopoly and Strategy
Chapter 7 Monopoly, Oligopoly and Strategy After reading Chapter 7, MONOPOLY, OLIGOPOLY AND STRATEGY, you should be able to: Define the characteristics of Monopoly and Oligopoly, and explain why the are
More informationChapter 4 Individual and Market Demand
Chapter 4 Individual and Market Demand Questions for Review 1. Explain the difference between each of the following terms: a. a price consumption curve and a demand curve The price consumption curve (PCC)
More informationChapter 6 Supply, Demand, and Government Policies
Chapter 6 Supply, Demand, and Government Policies Review Questions Using supply-demand diagrams, show the difference between a non-binding price ceiling and a binding price ceiling in the wheat market.
More information3.3 Applications of Linear Functions
3.3 Applications of Linear Functions A function f is a linear function if The graph of a linear function is a line with slope m and y-intercept b. The rate of change of a linear function is the slope m.
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Chapter 3 - Demand and Supply - Sample Questions Answers are at the end fo this file MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) A relative
More informationMidterm #1: Practice Midterm
Dr. Barry Haworth University of Louisville Department of Economics Economics 201 Midterm #1: Practice Midterm 1. One topic that is sometimes debated at all levels of government is whether to fund athletic
More information4 THE MARKET FORCES OF SUPPLY AND DEMAND
4 THE MARKET FORCES OF SUPPLY AND DEMAND IN THIS CHAPTER YOU WILL Learn what a competitive market is Examine what determines the demand for a good in a competitive market Chapter Overview Examine what
More informationSupply and Demand Fundamental tool of economic analysis Used to discuss unemployment, value of $, protection of the environment, etc.
Supply and emand Fundamental tool of economic analysis Used to discuss unemployment, value of $, protection of the environment, etc. Chapter Outline: (a) emand is the consumer side of the market. (b) Supply
More informationSupply and Demand CHAPTER 4. Thomas Carlyle. Teach a parrot the terms supply and demand and you ve got an economist. Supply and Demand 4
CHAPTER 4 Supply and Demand Teach a parrot the terms supply and demand and you ve got an economist. Thomas Carlyle McGraw-Hill/Irwin Copyright 2010 by the McGraw-Hill Companies, Inc. All rights reserved.
More informationPractice Questions Week 2 Day 1 Multiple Choice
Practice Questions Week 2 Day 1 Multiple Choice 1. When individuals come together to buy and sell goods and services, they form a(n) a. economy b. market c. production possibilities frontier d. supply
More informationProduction Possibilities Curve, Absolute and Comparative Advantage, Opportunity Cost, and Marginal Analysis
AP Macroeconomics Unit 1 Review Session Production Possibilities Curve, Absolute and Comparative Advantage, Opportunity Cost, and Marginal Analysis 1. Draw a PPC with linear opportunity cost. 2. Draw a
More informationLAW OF MARKET EQUILIBRIUM A free market, if out of equilibrium, tends toward equilibrium.
LAW OF MARKET EQUILIBRIUM A free market, if out of equilibrium, tends toward equilibrium. Free market = one in which prices and quantities are set by bargaining between fully informed buyers and sellers
More informationQE1: Economics Notes 1
QE1: Economics Notes 1 Box 1: The Household and Consumer Welfare The final basket of goods that is chosen are determined by three factors: a. Income b. Price c. Preferences Substitution Effect: change
More informationElasticity and Its Application
Elasticity and Its Application Chapter 5 All rights reserved. Copyright 2001 by Harcourt, Inc. Requests for permission to make copies of any part of the work should be mailed to: Permissions Department,
More informationEcon 101: Principles of Microeconomics
Econ 101: Principles of Microeconomics Chapter 7: Taxes Fall 2010 Herriges (ISU) Ch. 7: Taxes Fall 2010 1 / 25 Outline 1 The Excise Tax 2 The Benefits and Costs of Taxation 3 Tax Fairness versus Tax Efficiency
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Econ 201 Practice Test 1 Professor V. Tremblay MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Scarcity can best be defined as a situation in which:
More informationElasticity. Demand is inelastic if it does not respond much to price changes, and elastic if demand changes a lot when the price changes.
Elasticity The price elasticity of demand measures the sensitivity of the quantity demanded to changes in the price. Demand is inelastic if it does not respond much to price changes, and elastic if demand
More informationChapter 3. The Concept of Elasticity and Consumer and Producer Surplus. Chapter Objectives. Chapter Outline
Chapter 3 The Concept of Elasticity and Consumer and roducer Surplus Chapter Objectives After reading this chapter you should be able to Understand that elasticity, the responsiveness of quantity to changes
More informationMidterm is in class on Wednesday, October 10. Bring #2 pencil and a calculator. No telephone-based calculators are allowed.
Economics 103 Fall 2012: Short answer/graphing review questions for first midterm. Additional practice questions are in the text within and at the end of each chapter. Midterm is in class on Wednesday,
More informationChapter 03 The Concept of Elasticity and Consumer and
Chapter 03 The Concept of Elasticity and Consumer and Multiple Choice Questions Use the following Figure 3.1 to answer questions 1-4: Figure 3.1 1. In Figure 3.1, if demand is considered perfectly elastic,
More informationHow To Calculate Market Prices
Finance 30210 roblem et #2 1) uppose you are thinking about starting a lawn service in your area. The lawn service market can be considered perfectly competitive. You own a $200 lawnmower. You have a fixed
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Chapter 6 - Markets in Action - Sample Questions MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The short-run impact of the San Francisco earthquake
More informationCHAPTER 2 THE BASICS OF SUPPLY AND DEMAND
CHAPTER 2 THE BASICS OF SUPPLY AN EMAN EXERCISES 1. Consider a competitive market for which the quantities demanded and supplied (per year) at various prices are given as follows: Price ($) emand (millions)
More informationchapter >> First Principles Section 1: Individual Choice: The Core of Economics
chapter 1 Individual choice is the decision by an individual of what to do, which necessarily involves a decision of what not to do. >> First Principles Section 1: Individual Choice: The Core of Economics
More information4. According to the graph, assume that Cliff and Paul were both producing wheat and corn, and each were dividing their time equally between the two. T
1. Your professor loves his work, teaching economics. He has been offered other positions in the corporate world making 25 percent more, but has decided to stay in teaching. His decision would not change
More informationChapter 14 Monopoly. 14.1 Monopoly and How It Arises
Chapter 14 Monopoly 14.1 Monopoly and How It Arises 1) A major characteristic of monopoly is A) a single seller of a product. B) multiple sellers of a product. C) two sellers of a product. D) a few sellers
More informationEcon 201 Final Exam. Douglas, Fall 2007 Version A Special Codes 00000. PLEDGE: I have neither given nor received unauthorized help on this exam.
, Fall 2007 Version A Special Codes 00000 PLEDGE: I have neither given nor received unauthorized help on this exam. SIGNED: PRINT NAME: Econ 201 Final Exam 1. For a profit-maximizing monopolist, a. MR
More informationBPE_MIC1 Microeconomics 1 Fall Semester 2011
Masaryk University - Brno Department of Economics Faculty of Economics and Administration BPE_MIC1 Microeconomics 1 Fall Semester 2011 Final Exam - 05.12.2011, 9:00-10:30 a.m. Test A Guidelines and Rules:
More informationchapter: Solution Solution The Rational Consumer
S11-S156_Krugman2e_PS_Ch1.qxp 9/16/8 9:21 PM Page S-11 The Rational Consumer chapter: 1 1. For each of the following situations, decide whether Al has increasing, constant, or diminishing marginal utility.
More informationPrinciples of Economics: Micro: Exam #2: Chapters 1-10 Page 1 of 9
Principles of Economics: Micro: Exam #2: Chapters 1-10 Page 1 of 9 print name on the line above as your signature INSTRUCTIONS: 1. This Exam #2 must be completed within the allocated time (i.e., between
More informationReview Question - Chapter 7. MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Review Question - Chapter 7 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) International trade arises from A) the advantage of execution. B) absolute
More informationGovernment intervention
Government intervention Explain the term free market. In a free market, governments stand back and let the forces of supply and demand determine price and output. There is no direct (eg regulations) or
More informationChapter 3 Quantitative Demand Analysis
Managerial Economics & Business Strategy Chapter 3 uantitative Demand Analysis McGraw-Hill/Irwin Copyright 2010 by the McGraw-Hill Companies, Inc. All rights reserved. Overview I. The Elasticity Concept
More informationDemand, Supply and Elasticity
Demand, Supply and Elasticity CHAPTER 2 OUTLINE 2.1 Demand and Supply Definitions, Determinants and Disturbances 2.2 The Market Mechanism 2.3 Changes in Market Equilibrium 2.4 Elasticities of Supply and
More informationChapter 7: Market Structures Section 1
Chapter 7: Market Structures Section 1 Key Terms perfect competition: a market structure in which a large number of firms all produce the same product and no single seller controls supply or prices commodity:
More information1. Supply and demand are the most important concepts in economics.
Page 1 1. Supply and demand are the most important concepts in economics. 2. Markets and Competition a. Market is a group of buyers and sellers of a particular good or service. P. 66. b. These individuals
More informationQuantity Tax Incidence Subsidy Welfare Effects Case Study. Equilibrium Chapter 16
Equilibrium Chapter 16 Competitive Equilibrium: Motivating Questions Firms are price-takers in competitive markets, but how is the market price (and quantity) determined? competitive equilibrium What happens
More informationSection B. Some Basic Economic Concepts
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike License. Your use of this material constitutes acceptance of that license and the conditions of use of materials on this
More information