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________ is the difference between the willingness to pay and the price paid for a good.
Consumer surplus
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A good is said to have a relatively elastic demand if the value of price elasticity is:
greater than 1.
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If a 1% change in the price of a good causes a 1% change in the quantity demanded, the good has an elasticity of demand:
equal to 1.
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Sandra consumes two goods: tea and coffee. Her demand for tea is inelastic, while her demand for coffee is elastic. If there is an increase in the price of both tea and coffee, ________.
Sandra's expenditure on tea will increase and her expenditure on coffee will decrease
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Which of the following best describes a good with perfectly elastic demand?
Even the smallest increase in the price of the good will cause consumers to stop consuming it completely.
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The price elasticity of demand for a good that is a necessity is likely to be:
inelastic.
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Which of the following statements best describes a normal good?
A normal good is a good whose demand increases with an increase in consumers' income.
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All firms in a perfectly competitive market are said to be __________.
price takers.
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In a perfectly competitive market, a seller __, choose to raise the price of its good since all sellers in the market produce ____, so raising the price would result in
cannot, identical goods, losing all its consumers
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When the ATC curve is decreasing, we know that the MC curve is ___
when the ATC curve is increasing, we know that MC is
below the ATC , above the ATC curve
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Which of the following equations calculates the profits of a firm?
Total revenuesminus−Total costs
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When comparing the accounting profit with economic profit, it must be true that the accounting profit is____ economic profit.
greater than or equal to
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