38 terms

AP Microeconomics Section 9 Test

STUDY
PLAY

Terms in this set (...)

What refers to consumers purchasing more of some good in response to a price increase for another good?
Substitution effect
Suppose the price elasticity of demand for cheeseburgers equals 1.37. This means the demand for cheeseburgers is?
Price elastic
A perfectly price-elastic demand curve is?
Vertical
Ceteris paribus, a good that is a necessity tends to have?
Perfectly inelastic demand
What implies that quantity supplied is zero below some price and infinite above it?
Perfectly elastic supply
What is calculated by dividing the % change in quantity demanded by % change in income?
Income elasticity of demand
What effect tends to decrease revenue after a price increase for some product?
Quantity
Perfectly elastic demand...
Can be represented by a line parallel to the horizontal axis
The percentage change in quantity demanded of one good or service divided by the percentage change in the price of a related good or service is what?
Cross-price elasticity of demand
Which of the following would be most likely to have a vertical supply curve ?
Paintings by Van Gogh
If the price elasticity of supply is greater than 1, then...
Supply is price-elastic
The price elasticity of demand coefficient is a measure of...
Buyer responsiveness to price changes
If the income elasticity of demand for a good is positive, the good is said to be a/an...
Normal good
Downward-sloping linear demand curves are...
Elastic in high-price ranges and inelastic and low-price ranges
What is generally more elastic in the long run than in the short run?
Demand
What can always be found by multiplying price and quantity?
Total revenue
Cross elasticity of demand measures how sensitive purchases of a specific product are to change in...
The price of some other product
Suppose the price elasticity of demand for Dr. Pepper is 0.25. This means the overall demand for Dr. Pepper is...
Price inelastic
An important determinant of the price elasticity of demand is the...
Availability of substitutes
To say that two goods are complements, their cross-price elasticities of demand should be...
Less than zero
The percentage change in quantity demanded of one good or service divided by the percentage change in the price of a related good or service is...
Price elasticity of demand
After a price decrease, the price effect tends to ____ total revenue and the the quantity effect tends to ____ total revenue.
Decrease;Increase
A long a given demand curve and increasing the price of a good will
Decrease consumer surplus
Consumer surplus is represented by the the area ______ the demand curve and ______ the price
Below; Above
A regressive tax is one that takes a...
Lower percentage of income as income rises
Economists described the satisfaction consumers receive from consuming goods and services as...
Utility
Producer surplus for an individual seller is equal to...
The willingness to pay for the good, minus the price of the good
The incidence of a tax...
Refers to the share the tax paid by consumers and the share paid by sellers
A line representing all the possible combinations of two commodities that a consumer can purchase at a particular time, given the market prices of the commodities and the consumer's income, is a/an...
Budget line
A tax that takes a larger share of the income of high-income taxpayers than of low-income tax taxpayers is called a...
Progressive tax
The amount by which total utility increases or decreases when an additional unit of a good is consumed is called ______ utility
Marginal
Consumer surplus for an individual buyer is equal to what?
The consumer's willingness to pay for the good, minus the price of the good
At the optimal consumption bundle...
The marginal utility of all goods consumed is equal
The principle of diminishing marginal utility...
Refers to the tendency of marginal utility to decline as the amount of consumption of a good or service increases
Willingness to pay refers to...
The maximum price at which a buyer will buy a good
A consumer's spending is restricted because of...
A budget constraint
Taxes paid on the purchase of specific items such as gasoline, cigarettes, or alcoholic beverages would fall into the category of...
Excise taxes
Total surplus is...
The sum of consumer and producer surplus