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Question
For a consumer, which of the following statements about the real-income effect is true?
a. It matters only when prices change enough to cause a measurable effect on the purchasing power of a consumers income.
b. It can be observed for any price change.
c. It occurs when a consumer buys more of a good as a result of a relative price change.
d. It matters only when prices change enough to cause a consumer to purchase more of the good whose price changed.
e. The purchasing power of your income increases when the price of a good increases.
Answer
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Related questions
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When the price elasticity of demand is elastic, a consumer is
a. completely unresponsive to a change in price.
b. relatively unresponsive to a change in price.
c. unaffected by a change in price.
d. relatively responsive to a change in price.
e. completely responsive to a change in price.
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If the price elasticity of demand for Good A is - 0.2 and the price increases from $2.25 to $2.75, the percentage change in the quantity demanded of Good A is
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b. 100 percent.
c. 4.0 percent
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e. unknown because not enough information is provided.
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Price gouging laws will usually result in ________ the product in the distressed market.
a. more supply of
b. more local business start-ups to supply
c. government setting up an agency to regulate supply of
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The economic entity most likely to engage in price gouging is
a. the manufacturer of the product, such as a Honda generator.
b. a national big-box store, such as Target or Walmart.
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e. a local resident who wants to get rid of his or her own product.
Q:
The long-run effects of rent control support one of the five foundations of economics, namely, that
a. people respond to incentives.
b. society faces a trade-off between homelessness and rent control.
c. one must give up something in order to get something else.
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What will an individual do differently as a buyer in the black market in the long run?
a. He or she will substitute away from the product.
b. He or she will substitute toward the product.
c. When a binding price floor exists, he or she will be willing to pay a higher price.
d. When a binding price ceiling exists, he or she will be willing to pay a lower price.
e. What he or she does as a buyer in the long run will be no different from what he or she does in the short run.
Q:
What is the long-run consequence of a price ceiling law?
a. A surplus will continue to exist and will grow larger over time.
b. A surplus will continue to exist and will grow smaller over time.
c. A shortage will continue to exist and will grow larger over time.
d. A shortage will continue to exist and will grow smaller over time.
e. The amount of the surplus will not change.
Q:
Suppose Solomon lives in a community with no price controls. What do you expect will happen if his town borders a community where there is a binding price ceiling on most products?
a. Prices in the legal market in the community with a binding price ceiling will rise.
b. Prices in the legal market in the community with a binding price ceiling will fall.
c. There will be shortages in the community with a binding price ceiling.
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Q:
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a. The binding price ceiling will encourage companies to overproduce drugs and will result in waste.
b. The binding price ceiling will discourage patients from obtaining the drugs they need.
c. The binding price ceiling will increase the likelihood that consumers will obtain needed drugs on the black market.
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e. The binding price ceiling will cause firms to spend too much time making a drug without any flaws.
Q:
One strategy someone might use to be elected mayor of a university town is to place a binding price ceiling on rent for student apartments. What will happen if he or she gets elected and is able to pass such a law?
a. The price ceiling will increase the number of apartments available for rent.
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c. Demand and supply both become more elastic.
d. Demand and supply both become more inelastic.
e. Demand becomes more elastic, but supply becomes more inelastic.
Q:
Suppose Kate lives in a community with no price controls. What could she expect will happen if her town borders a community where there is a nonbinding price ceiling on most products?
a. Legal market prices will rise in the community with a binding price ceiling.
b. Legal market prices will fall in the community with a binding price ceiling.
c. The price and the quantity sold in the community without a nonbinding price ceiling will be the same as the price and quantity in the community with a nonbinding price ceiling.
d. There will be more shortages in the community with a binding price ceiling.
e. The black market in the community with a binding price ceiling will not be strong because consumers will simply purchase the product in the community that has no price ceiling.
Q:
Why would a politician find it difficult to remove a binding price ceiling?
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b. because it greatly benefits government, which receives additional tax revenue as a result
c. because it greatly benefits all consumers, and they are also voters
d. because it greatly benefits some consumers who are also voters
e. because it greatly benefits society as a whole, with all consumers able to buy as much as firms produce
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b. Binding price floors encourage the formation of a black market.
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d. Binding price floors create a shortage of the product.
e. Binding price floors cause consumers to want to purchase more of the product in the legal market.
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c. the change in producer behavior is smaller.
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e. the change in producer behavior is greater.
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e. the change in consumer behavior is greater.
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A(n) ________ in the elasticity of supply or demand in a market for a good that is taxed would tend to ________ who is legally responsible for paying the tax.a. decrease; broaden b. decrease; have no effect on c. increase; broadend. increase; narrowe. increase; have no effect on
Q:
Peanut butter and jelly are complements. If a tax is imposed on peanut butter, how will that affect the market for jelly?
a. Demand for jelly will increase along with the price.
b. Demand for jelly will decrease along with the price.
c. The supply of jelly will increase and the price will decrease.
d. Both the supply and demand for jelly will increase along with the price.
e. The supply of jelly will decrease and the price will increase.
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Q:
A tax creates no deadweight loss only when either supply or demand isa. somewhat elastic. b. perfectly elastic. c. perfectly inelastic.d. increasing.e. decreasing.
Q:
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