Econ 1014 Exam 2 Cheat Sheet - Review Steeper Curve...

Review: Steeper Curve: less elastic 
Flatter Curve: more elastic 
MR=MC
Chapter 6 Taxes and Subsidies:
Tax = Price paid by buyers – price received by
sellers
Subsidy = price received by sellers – price
paid by buyers
*When demand is more elastic than supply,
demanders pay less of the tax than sellers.
When supply is more elastic than demand,
suppliers pay less of the tax than
buyers*
Elasticity = Escape
Commodity Tax: taxes on goods; Ex: fuel,
liquor, cigarettes; raises revenue and creates
DWL
Chapter 7 The Price System:
Great Economic Problem: problem of how to
arrange our limited resources to satisfy as
many of our wants as possible.
The price of a good contains information
about: The value of the good to consumers
and the cost of producing the good.
Speculation: the attempt to profit from future
price changes. *can narrow price
fluctuations*
Futures: standardized contracts to buy or sell
specified quantities of a commodity or
financial instrument at a specified price with