Econ 110 Exam 2 Review Zirlott Questions
With Correct Answers
A |price |ceiling |is |BINDING |when |it |is |set |- |CORRECT |ANSWER✔✔-Below |the |Equilibrium |price, |
causing |a |shortage.
Economist |use |the |concept |of |price |elasticity |of |demand |to |- |CORRECT |ANSWER✔✔-Measure |
how |much |buyers |respond |to |changes |in |the |price |of |a |good.
When |demand |is |perfectly |inelastic, |the |price |elasticity |of |demand |- |CORRECT |ANSWER✔✔-is |
zero |and |the |demand |curve |is |vertical
Perfectly |elastic |demand |implies |that |- |CORRECT |ANSWER✔✔-Any |raise |in |price |above |that |
represented |by |the |demand |curve |will |result |in |no |output |demand.
When |the |price |of |a |good |falls, |- |CORRECT |ANSWER✔✔-Consumer |surplus |rises |but |existing |
buyers |gain |an |extra |benefit |and |new |buyers |will |now |purchase |the |product.
An |excise |tax |of |$11 |placed |on |bikes |will |shift |the |demand |curve |- |CORRECT |ANSWER✔✔-Not |
at |all, |but |the |supply |curve |will |shift |to |the |left.
We |can |say |that |the |allocation |of |resources |is |efficient |when |- |CORRECT |ANSWER✔✔-The |sum
|of |producer |surplus |and |consumer |surplus |is |maximized
Tax |incidence |is |the |- |CORRECT |ANSWER✔✔-Division |of |a |tax |burden |between |the |buyer |and |
sellers
, Consumer |surplus |is |- |CORRECT |ANSWER✔✔-The |amount |the |consumer |was |willing |to |pay |
minus |the |amount |the |consumer |paid.
A |price |floor |is |- |CORRECT |ANSWER✔✔-The |lowest |legal |price |that |can |be |charged |for |a |
particular |good |or |service
The |price |elasticity |of |supply |measures |how |much |- |CORRECT |ANSWER✔✔-The |quantity |
supplied |responds |to |changes |in |the |price |of |a |good
Suppose |good |X |has |a |positive |income |elasticity |of |demand. |This |implies |that |good |X |is |- |
CORRECT |ANSWER✔✔-a |Normal |Good.
Suppose |there |is |a |5% |increase |in |the |price |of |good |X |and |there |is |a |resulting |9% |decrease |in |
the |quantity |good |X |demanded. |Price |elasticity |of |demand |for |X |is |- |CORRECT |ANSWER✔✔-1.8
In |general |a |relatively |vertical |demand |curve |is |more |likely |to |be |- |CORRECT |ANSWER✔✔-Price
|inelastic
All |of |the |following |statements |about |marginal |benefit |are |correct |Except |the |marginal |benefit
|of |a |good |- |CORRECT |ANSWER✔✔-is |equal |to |zero |when |resource |use |is |efficient.
Consumer |surplus |is |the___________summed |over |the |quantity |bought. |- |CORRECT |
ANSWER✔✔-Value |of |a |good |or |service |minus |the |price |paid |for |the |good |or |service
Marginal |cost |is |- |CORRECT |ANSWER✔✔-The |opportunity |cost |of |producing |one |more |unit.
Nick |can |purchase |a |milkshake |for |2$. |For |the |first |milkshake |purchased |nick |is |willing |to |pay |
4$, |for |the |second |milkshake |3$, |for |the |third |milkshake |2$ |and |the |fourth |milkshake |1$. |What
|is |the |value |of |Nick's |consumer |surplus |for |the |milkshakes |he |buys? |- |CORRECT |ANSWER✔✔-
3$
With Correct Answers
A |price |ceiling |is |BINDING |when |it |is |set |- |CORRECT |ANSWER✔✔-Below |the |Equilibrium |price, |
causing |a |shortage.
Economist |use |the |concept |of |price |elasticity |of |demand |to |- |CORRECT |ANSWER✔✔-Measure |
how |much |buyers |respond |to |changes |in |the |price |of |a |good.
When |demand |is |perfectly |inelastic, |the |price |elasticity |of |demand |- |CORRECT |ANSWER✔✔-is |
zero |and |the |demand |curve |is |vertical
Perfectly |elastic |demand |implies |that |- |CORRECT |ANSWER✔✔-Any |raise |in |price |above |that |
represented |by |the |demand |curve |will |result |in |no |output |demand.
When |the |price |of |a |good |falls, |- |CORRECT |ANSWER✔✔-Consumer |surplus |rises |but |existing |
buyers |gain |an |extra |benefit |and |new |buyers |will |now |purchase |the |product.
An |excise |tax |of |$11 |placed |on |bikes |will |shift |the |demand |curve |- |CORRECT |ANSWER✔✔-Not |
at |all, |but |the |supply |curve |will |shift |to |the |left.
We |can |say |that |the |allocation |of |resources |is |efficient |when |- |CORRECT |ANSWER✔✔-The |sum
|of |producer |surplus |and |consumer |surplus |is |maximized
Tax |incidence |is |the |- |CORRECT |ANSWER✔✔-Division |of |a |tax |burden |between |the |buyer |and |
sellers
, Consumer |surplus |is |- |CORRECT |ANSWER✔✔-The |amount |the |consumer |was |willing |to |pay |
minus |the |amount |the |consumer |paid.
A |price |floor |is |- |CORRECT |ANSWER✔✔-The |lowest |legal |price |that |can |be |charged |for |a |
particular |good |or |service
The |price |elasticity |of |supply |measures |how |much |- |CORRECT |ANSWER✔✔-The |quantity |
supplied |responds |to |changes |in |the |price |of |a |good
Suppose |good |X |has |a |positive |income |elasticity |of |demand. |This |implies |that |good |X |is |- |
CORRECT |ANSWER✔✔-a |Normal |Good.
Suppose |there |is |a |5% |increase |in |the |price |of |good |X |and |there |is |a |resulting |9% |decrease |in |
the |quantity |good |X |demanded. |Price |elasticity |of |demand |for |X |is |- |CORRECT |ANSWER✔✔-1.8
In |general |a |relatively |vertical |demand |curve |is |more |likely |to |be |- |CORRECT |ANSWER✔✔-Price
|inelastic
All |of |the |following |statements |about |marginal |benefit |are |correct |Except |the |marginal |benefit
|of |a |good |- |CORRECT |ANSWER✔✔-is |equal |to |zero |when |resource |use |is |efficient.
Consumer |surplus |is |the___________summed |over |the |quantity |bought. |- |CORRECT |
ANSWER✔✔-Value |of |a |good |or |service |minus |the |price |paid |for |the |good |or |service
Marginal |cost |is |- |CORRECT |ANSWER✔✔-The |opportunity |cost |of |producing |one |more |unit.
Nick |can |purchase |a |milkshake |for |2$. |For |the |first |milkshake |purchased |nick |is |willing |to |pay |
4$, |for |the |second |milkshake |3$, |for |the |third |milkshake |2$ |and |the |fourth |milkshake |1$. |What
|is |the |value |of |Nick's |consumer |surplus |for |the |milkshakes |he |buys? |- |CORRECT |ANSWER✔✔-
3$
