Quiz 4

Question 1

the lowest price at which a potential seller is willing to sell a good

Answer 1

cost

Question 2

a term often used to refer both to INDIVIDUAL consumer surplus and to TOTAL consumer surplus

Answer 2

consumer surplus

Question 3

when the price elasticity of demand is less than 1

Answer 3

inelastic demand

Question 4

the percent change in the quantity of a good demanded when a consumer’s income changes divided by the percent change in the consumer’s income

Answer 4

income elasticity of demand

Question 5

the net gain to an individual buyer from the purchase of a good; equal to the difference between the buyer’s willingness to pay the price paid

Answer 5

individual consumer surplus

Question 6

the net gain to an individual seller from selling a good; equal to the difference between the price received and the seller’s cost

Answer 6

individual producer surplus

Question 7

the price elasticity of demand is greater than 1

Answer 7

elastic demand

Question 8

the case in which the quantity demanded does NOT respond at all to changes in the price; the demand curve is a vertical line; elasticity is zero

Answer 8

perfectly inelastic demand

Question 9

the case in which the quantity supplies does NOT respond at all to changes in the price; the supply curve is a vertical line; elasticity is zero

Answer 9

perfectly inelastic supply

Question 10

the case in which any price increase will cause the quantity demanded to drop to zero; the demand curve is a horizontal line and elasticity is infinite

Answer 10

perfectly elastic demand

Question 11

the case in which any price increase/deduction will cause the quantity supplies to drop to zero; the supply curve is a horizontal line and elasticity is infinite

Answer 11

perfectly elastic supply

Question 12

measures the responsiveness of the quantity to the price of that good; the ratio of the percent change in the quantity supplies to the percent change in the price as we move along the supply curve

Answer 12

price elasticity of supply

Question 13

a term often used to refer to either individual producer surplus or to total producer surplus

Answer 13

producer surplus

Question 14

a tax that takes a larger share of the income of high-income taxpayers than of low-income taxpayers

Answer 14

progressive tax

Question 15

the total value of sales of a product (the price of the product multiplies by the quantity sold)

Answer 15

total revenue

Question 16

the sum of the individual consumer surpluses of all of the buyers of a good in a market

Answer 16

total consumer surplus

Question 17

the sum of the individual producer surpluses of all the sellers of a good in a market

Answer 17

total producer surplus

Question 18

the total net gain to consumers and producers from trading in a market; the sum of the consumer surplus and the producer surplus

Answer 18

total surplus

Question 19

the maximum price a consumer is prepared to pay for a good

Answer 19

willingness to pay

Question 20

the price elasticity of demand is exactly 1

Answer 20

unit-elastic demand

Question 21

measures between two goods the effect of the change in good A’s price on good B’s quantity demanded. It is equal to the percent change in the quantity demanded of good A divided by the percent change in the good B’s price

Answer 21

cross-price elasticity of demand

Question 22

a tax that takes a smaller share of the income of high-income taxpayers than of low-income taxpayers

Answer 22

regressive tax

Question 23

a tax that is the same percentage of the tax base regardless of the taxpayer’s income or wealth

Answer 23

proportional tax

Question 24

a tax on sales of a particular good or service

Answer 24

excise tax