Exam (elaborations)
ECON 1B03 Test 2 Questions and answers
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ECON 1B03 Test 2 Questions and answers
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1-111 of 111Goods whose factors of production/inputs are readily available are ___________ elastic
MORE ELASTIC
-factors of production more available = more elastic, bc they can increase
output to respond to changes in P easier!
,Willingness-to-pay
(aka reservation price)
the maximum amount that a buyer will pay for a good.
-measures the value the buyer places on the good.
(in $$)
Tax consumers vs taxing firms? who takes bigger tax burden?
Give this one a go later!
the burden of the tax is the same regardless of whether the tax is placed
on the consumers OR on the firms!
-each pays the SAME AMOUNT NO MATTER WHO the tax is levied on!
What does Ep<1 mean?
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demand is inelastic, NOT responsive to a change in price.
Rent control
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, Rent control is an example of a price ceiling, which is BELOW equilibrium
price.
-a set MAX $ below equilibrium.
the more that someone consumers of something, the ______ their willing to pay for that
same good
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LESS
which is smaller, Economic or accounting profit?? WHY?
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oEconomic profit is smaller than accounting profit because economic
costs are bigger bc its including implicit costs,
* accounting only considers explicit costs
The demand curve can also be considered as the_________ curve
& the supply curve is the same as the __________ curve
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, Demand curve: marginal private benefit (MPB) curve
Supply curve: marginal private cost curve or marginal cost, MC, for short.
black markets
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vertical line to the left of equilibrium point,
at Q ceiling, consumers are wiling to pay more. Landlords charge the diff
between ceiling Price and black market Price (on the demand curve) under
the table.
Fixed vs. Variable inputs?
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Fixed= can not vary!
-ex:physical capital: factory, machines, cash registers
variable inputs: can vary in quantity. ex: labour! v easy to hire/fire ppl!
The more ___________the market is, _________elastic demand for that good
Give this one a go later!
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