$400 Question Simultaneous For a normal product, there has been an increase in the price of a substitute product along with a decrease in the price of resources. What affect will these changes have on the eventual equilibrium price and quantity demanded?
$500 Question Simultaneous For an inferior product, there has been an increase consumers income as well as there is an expected future increase in the market price of the product. What affect will these changes have on the eventual equilibrium price and quantity demanded?
$100 Question Ceilings Define the term price ceiling.
$100 Answer Ceilings A price ceiling is a government mandated maximum price at which a product can be sold legally.
$200 Question Ceilings When a price ceiling is introduced, what occurs in the market and what type of market develops as a result?
$200 Answer Ceilings A shortage occurs. A black market develops.
$300 Question Ceilings List the 4 methods of allocation for products to deal with a shortage.
$300 Answer Ceilings 1.The market 2. First come, first served 3. Producers preference 4. Rationing
$400 Question Ceilings Identify two key reasons why rent control can lead to low vacancy rates.
$400 Answer Ceilings 1.Landlords are less likely to offer property at the low rental rate. 2. More people move to the area due to the low rental rates.
$500 Question Ceilings Describe how rent control allows landlords to discriminate.
$500 Answer Ceilings Due to the shortage of housing, there are many buyers to choose between. Landlords are able to pick and choose between tenants based on non-economic factors because they must all be charged the same rental rate.
$100 Question Floors Define the term price floor.
$100 Answer Floors A price floor is a government mandated minimum price at which a product can legally be sold.
$200 Question Floors What occurs in the market as a result of a price floor? What does this represent in relation to employment?
$200 Answer Floors A surplus occurs in the market. Unemployment.
$300 Question Floors List the 5 methods of dealing with a surplus.
$300 Answer Floors 1.Store it. 2. Convert it. 3. Sell it abroad. (Dump it) 4. Donate it. 5. Destroy it.
$400 Question Floors Identify the two ways that teenagers are harmed by the minimum wage.
$400 Answer Floors 1.They lose their jobs immediately and lose income as a result. 2. They have trouble finding another job and as a result cannot gain experience or work skills.
$500 Question Floors Describe how the minimum wage allows employers to discriminate.
$500 Answer Floors There is a surplus of employees, and therefore many applicants for employment positions. Employers must pay all applicants the same wage, and therefore can pick and choose based on non-economic factors.
$100 Question Elasticity Calculate the total revenue for the following product: Quantity of 50 sold @ $40 each.
$100 Answer Elasticity Total Revenue = Price x Quantity Total Revenue = $40 x 50 Total Revenue = $2000
$200 Question Elasticity Define the term price elasticity of demand.
$200 Answer Elasticity The responsiveness of quantity demanded to a change in price.
$300 Question Elasticity List three determinants of elasticity.
$300 Answer Elasticity 1.The length of time since the price change. 2. The # and closeness of substitutes. 3. The % of income the product represents. 4. The necessity of, or addiction for, the product.
$400 Question Elasticity Identify the following as inelastic or elastic demand: 1.Coefficient <1 2. Coefficient >1 3. Demand for drugs. 4. Demand for tomatoes.
$100 Question Miscellaneous Fill in the following blanks: 1.If demand is inelastic and price rises, total revenue will _______. 2. If demand is _______ and price falls, total revenue will rise.
$100 Answer Miscellaneous 1. If demand is inelastic and price rises, total revenue will rise. 2. If demand is elastic and price falls, total revenue will rise.
$200 Question Miscellaneous Categorize the following as either a price ceiling or price floor: 1.Rent control 2. Minimum wage 3. Agricultural price control 4. Salary cap
$200 Answer Miscellaneous 1. Rent control - ceiling 2. Minimum wage – floor 3. Agricultural price control - floor 4. Salary cap - ceiling
$300 Question Miscellaneous Describe how governments can get away with charging Sin taxes on alcohol and cigarettes. Relate your answer to the elasticity of the products, and rules regarding total revenue and price.
$300 Answer Miscellaneous Alcohol and cigarettes have inelastic demand. Sin taxes will increase the price of the product, which will lead to an increase in total revenues and increased tax revenue for the government.
$400 Question Miscellaneous Describe how a war on drugs might increase crime rates – use the concepts or shortages/surpluses, elasticity, price, and total revenue in your answer.
$400 Answer Miscellaneous 1.War on drugs decreases supply. 2. Causes a shortage and prices increase. 3. Inelastic demand, so as prices increase total revenue in the market will rise. 4. To afford higher market prices, drug users turn to other crimes.
$500 Question Miscellaneous Describe how a good harvest might be bad for farmers – use the concepts or shortages/surpluses, elasticity, price, and total revenue in your answer.
$500 Answer Miscellaneous 1. A good harvest can lead to surpluses. 2. Causes prices to decrease. 3. If the product has inelastic demand (wheat), decreased prices lead to decreases in total revenue.
Final Jeopardy The Diamond-Water Paradox Identify the two criteria which determine the value of a product in our society.
Final Jeopardy Answer 1. Scarcity 2. Marginal Utility