Elasticity and Incentives – Flashcards
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The lowest amount a manufacturer can pay factory workers is an example of
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a price floor.
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In economics, if a good is inelastic,
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its supply or demand is not sensitive to price changes.
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On this graph, the top horizontal line represents
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a price floor set above equilibrium.
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A pair of stylish sneakers could be considered a because it is not a necessity.
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want
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Price controls on goods can be set by
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governments
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Which is an example of a positive incentive for consumers?
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a coupon clipped from a newspaper
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Tasty Treat Tea is a popular iced tea drink. When the manufacturer begins to use imported tea leaves, the price rises and consumer demand for the drink falls. This suggests that
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Tasty Treat Tea is an elastic good because it is more of a want than a need.
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Which statement best describes incentives?
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Incentives can be positive or negative
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The government has set a price floor on bread. Manufacturers cannot sell loaves for less than $5.00, which is a dollar above the market price. What will most likely result from this price control?
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The demand for bread will fall, which could result in an excess supply.
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Which is an example of a product that is considered a need?
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breakfast food
