ECON101 Study Guide - Midterm Guide: World Trade Organization, Passive Smoking, Decision Rule

• School: University of Alberta
• Department: Economics
• Course: ECON101
• Professor: Alexander Gainer

Document Summary

Midterm 2: 22. 5: covers chapters 8-11 and 13-14, 35 multiple choice questions, exam viewing hours: every tuesday (tory b121), thursday (tory 1 100) (9am/10am and. Question: suppose that you refill your cat"s prescription every month, buying exactly 30 pills, no more and no less, regardless of the price. Answer: draw out the supply and demand graph: title: pet medication, price on y-axis, quantity on x-axis. Remember that whoever is the most inelastic pays the most on tax. Taxes: creates a wedge between the price buyers pay and the price sellers receive. Increased the price consumers pay and decreases the price businesses receive: the above effects occur whether the buyer or the seller is taxed. More quantity falls below the surplus-maximizing quantity and the greater the dead weight loss. The size of dwl is determined by elasticity. If labour supply is inelastic, then this dwl is small.