exam set 2

  1. ________ is the difference between the willingness to pay and the price paid for a good.
    Consumer surplus
  2. A good is said to have a relatively elastic demand if the value of price elasticity​ is:
    greater than 1.
  3. 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.
  4. 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
  5. 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.
  6. The price elasticity of demand for a good that is a necessity is likely to​ be:
  7. 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.
  8. All firms in a perfectly competitive market are said to be​ __________.
    price takers.
  9. 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
  10. 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
  11. Which of the following equations calculates the profits of a​ firm?
    Total revenuesminus−Total costs
  12. When comparing the accounting profit with economic​ profit, it must be true that the accounting profit is____  economic profit.
    greater than or equal to
Card Set
exam set 2