More thoughts on Chapter 3 and moving through chapter 4
The demand shows how much (quantity) of that particular good or service purchasers are willing and
able to purchase at any particular price.
Alternatively it shows the maximum price purchasers are wi
Demand is all (P,Q) combinations that buyers are willing and able to purchase.
All prices are pictured in demand; quantity buyers are
willing and able to pay drops to zero when prices rise too
high. When price is zero, there is a particular maximum 18
Test on Chapters 1-6
TRUE/FALSE : Write the WORD True of False in the blank. Each correct answer is worth 2 points.
As long as neither supply nor demand is perfectly elastic, both suppliers and demanders will
pay part of any tax.
If a ta
The Power of Trade and
Every trade is an Exchange
Every exchange is a trade!
Many trades are voluntary
Some trades are not voluntary
Result or consequence of a previous voluntary exchange (rent, studies, travel)
Chapter 6 questions
2. Junk food has often been criticized for being unhealthy and too cheap, enticing the poor to
adopt unhealthy lifestyles. Suppose that the state of Oklakansas imposes a tax on junk food.
a. What needs to be true for the tax to actuall
How much a change in a causing factor affects the variable it causes.
factor elasticity of demand=
factor elasticity of supply=
percent change quantity demanded
percent changedemand factor
percent change quantity supplied
percent change su
Explanations for Test on Chapters 1-6
2. The tax results in a decrease in effective demand. That creates an immediate surplus at the old
equilibrium price level.
5. When the tax is imposed, the market suffers a dead weight loss. That deducts from gains in
A. Price Elasticity, sometimes called own-price elasticity, is defined as the percent change in quantity
demanded divided by the percent change in purchase price.
If demand is price inelastic, the absolute value of elasticity is a frac