ECON Test 1 – Flashcards
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Which of the following is not a determinant of the demand for a particular good?
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the prices of the inputs used to produce the good
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Which of the following events could shift the demand curve for gasoline to the left?
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the price of gasoline rises
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The law of supply states that when the price of a good rises,
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the quantity supplied of the good rises
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Which of the following demonstrates the law of supply?
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when ketchup prices rose, ketchup sellers increased their quantity supplied of ketchup
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What could cause a rightward shift in the market for tennis racquets?
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a decrease in the price of tennis racquet strings
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If consumers view cappuccinos and lattes as substitutes, what would happen to the equilibrium price and quantity of lattes if the price of cappuccinos rises?
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both the equilibrium price and quantity would increase
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The value of the price elasticity of demand for a good will be relatively large when
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the good is a luxury rather than a necessity
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Demand is said to be inelastic if the
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quantity demanded changes proportionately less than price
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When small changes in price lead to infinite changes in quantity demanded, demand is perfectly
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elastic, and the demand curve will be horizontal
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A perfectly inelastic demand implies that buyers
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purchase the same amount as before when the price rises or falls
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For a price floor to be binding must be
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set above equilibrium price
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A tax imposed on the sellers of a good will lower the
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effective price received by sellers, and lower the equilibrium quantity
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When a tax is placed on the sellers of cell phones, the size of the cell phone market
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and the effective price received by sellers both decrease
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A tax imposed on the buyers of a good will lower the
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effective price received by sellers, and lower the equilibrium quantity
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If the government levies a $5 tax per ticket on buyers of NFL game tickets, then the price paid by buyers of NFL game tickets would
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increase by less than $5
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If the government wants to reduce smoking, it should impose a tax on
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either buyers or sellers or cigarettes
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Suppose that in a particular market, the demand curve is highly elastic, and the supply curve is highly inelastic. If a tax is imposed in this market, then the
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sellers will bear a greater burden of the tax than the buyers
