Difference between revisions of "Economics Homework Three Answers - Student Ten"
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'''1. Give an example of a good that has a large price elasticity, meaning that a small decrease in price causes a big increase in demand.''' | '''1. Give an example of a good that has a large price elasticity, meaning that a small decrease in price causes a big increase in demand.''' | ||
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'''2. Explain the concept of income elasticity. | '''2. Explain the concept of income elasticity. | ||
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'''3. A nearly perfectly elastic demand curve is nearly ________ in shape; a nearly perfectly inelastic demand curve is nearly __________ in shape. | '''3. A nearly perfectly elastic demand curve is nearly ________ in shape; a nearly perfectly inelastic demand curve is nearly __________ in shape. | ||
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'''4. Why is the name "necessity" given to a good that has a price elasticity of less than one, and the name "luxury" given to a good that has a price elasticity of more than one? | '''4. Why is the name "necessity" given to a good that has a price elasticity of less than one, and the name "luxury" given to a good that has a price elasticity of more than one? | ||
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'''5. What is a substitute for french fries, and what is a complement for them? | '''5. What is a substitute for french fries, and what is a complement for them? | ||
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'''6. Give an example of a "normal" good, and an example of an "inferior" good. | '''6. Give an example of a "normal" good, and an example of an "inferior" good. | ||
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'''7. A "price ceiling" is a type of price control that sets the maximum price allowed by law for something (like a real ceiling). A "price floor" is a type of price control that sets a minimum price allowed by law for something (like a real floor). Does a price ceiling that is set below the equilibrium (free market) price cause a surplus or a shortage? Using the graph in this lecture, explain why a surplus or a shortage is created by a price ceiling.''' | '''7. A "price ceiling" is a type of price control that sets the maximum price allowed by law for something (like a real ceiling). A "price floor" is a type of price control that sets a minimum price allowed by law for something (like a real floor). Does a price ceiling that is set below the equilibrium (free market) price cause a surplus or a shortage? Using the graph in this lecture, explain why a surplus or a shortage is created by a price ceiling.''' | ||
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Revision as of 13:04, September 24, 2009
1. Give an example of a good that has a large price elasticity, meaning that a small decrease in price causes a big increase in demand.
2. Explain the concept of income elasticity.
3. A nearly perfectly elastic demand curve is nearly ________ in shape; a nearly perfectly inelastic demand curve is nearly __________ in shape.
4. Why is the name "necessity" given to a good that has a price elasticity of less than one, and the name "luxury" given to a good that has a price elasticity of more than one?
5. What is a substitute for french fries, and what is a complement for them?
6. Give an example of a "normal" good, and an example of an "inferior" good.
7. A "price ceiling" is a type of price control that sets the maximum price allowed by law for something (like a real ceiling). A "price floor" is a type of price control that sets a minimum price allowed by law for something (like a real floor). Does a price ceiling that is set below the equilibrium (free market) price cause a surplus or a shortage? Using the graph in this lecture, explain why a surplus or a shortage is created by a price ceiling.