Midterm 1 Review

If demand is more elastic than supply then consumers lose the greater amount of surplus.

The PPF reflects the trade-off between the efficient production of two different goods.

Deadweight loss can come from a lower level of economic activity.

If we expect the price of a good to increase then today's supply increases as well.

If a tax is imposed on producers then they will lose the greater amount of the surplus.

If the price of a substitute increases then the demand for the related good also increases.

A good has a price elasticity of demand of -2.3. That tells us demand is...

If the price of a complement decreases then the demand for the related good also decreases.

In perfectly competitive markets we find different degrees of market power depending on the realtive size of sellers.

The PPF reflects how price and quantity are related for a single good.

The cost to society created by distortions in the market as a result of a tax is often also...

The percentage of the budget spent on a good relates to the price elasticity of demand.

Price controls always have an effect in the market distorting prices.

When income increases demand will always shift to the right.

Elasticity informs firms on how they can increase revenue.

Under binding price floors a surplus develops.

Producer surplus is the difference between market prices and the wilingness to sell.

All price controls benefit either all consumers or all buyers for which the control is imposed.

If someone has a comparative advantage then they have a lower opportunity cost of producing that good.

The cost of producing a good affects the price elasticity of demand.

The law of demand relates to why we have a downward sloping demand.

Consumer and producer surplus are gains from trading in the market.

A good has an income elasticity of demand of -2.3. That tells us demand is...

In the long run as we adjust to new market conditions demand and supply tend to be more price-elastic.

If no matter the price our consumption would never change then price elasticity of demand is...

If regulations are imposed that raise the cost of labor then what happens to supply?

Being very price elastic means that there is little response to changes in price.

The good or service on which the biggest percentage of income is spent is the least responsive to price changes.

In a world of scarcity only some decisions incur costs.

A company that pays employees a commission on each unit sold is providing a(n) ________ incentive.

Cross-price elasticity of -1.3 means the related goods are substitutes.

Taxes imposed with more elastic demand generate less deadweight loss.

Cross-price elasticity of -0.8 means the related goods are complements.

The PPF reflects how firms should price new products.

Economics seeks to understand how limited resources get allocated to satisfy limitless wants.

The unintended consequence of binding price controls are black markets.