# Econ Unit 2

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B

B

C

### the equilibrium price is when

the number of x demanded and the number of x supplied is equal

equilibrium

left

### rent control...

serves as an example of a price ceiling

### if the minimum wage exceeds the equilibrium wage then

the quantity supplied of labor will exceed the quantity demanded

### in a competitive market free of government regulation

price adjusts until quantity demanded equals quantity supplied

### to find the amount of tax imposed

find the difference between the supply curves

### the price elasticity of demand coefficient measures

buyer responsiveness to price changes

### if the price of hand calculators falls from \$10 to \$9 and as a result the quantity demand increases from 100 to 125 then

demand is elastic

### if a firm can sell 3000 units of product A at \$10 per unit and 5000 at \$8 then

the price elasticity of demand is 2.25

income

### the cross elasticity between pepsi and coke is

positive, indicating substitute goods

### a manufacturer of frozen pizza found that total revenue decreases when price was lowered from \$5 to \$4. it was also found that the total; revenue decreased when the price was raised from \$5 to \$6. Thus,

the demand for pizza is elastic above \$5 and inelastic below \$5

### rutgers university raises tuition for the purpose of increasing its revenue so that more faculty can be hired. rutgers is assuming that the demand for education at RU is

relatively inelastic

### if demand for product x is inelastic, a 4 percent increase in the price of X

will decrease the quantity of X demanded by less than 4 percent

### price increases

quantity demanded decreases

shifts right

shifts left

right shift

left shift

### inferior goods

demand increases as incomes decrease

### substitute goods

one can be substituted for another

### complementary goods

if the price of one goes up and its demand decreases, so will the demand of the other one

elastic it is

### inelastic goods

price goes up but there is not a big change in people who will buy it
ex. tobacco

### unit elastic

equal change in price and demand

P change in Q
x
Q change in P

### answer to PED is 0

perfectly inelastic

inelastic

unitary

elastic

perfect elastic

### price floor

legal minimun on the price at which a good can be sold

### price ceiling

legal maximum on the price at which a good can be sold

### when the price ceiling is above the equilibrium point it

doest affect the market

### misallocation of recourses is

anything inefficient

### who pays for a tax?

producers and consumers

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