ECON 1 Study Guide - Midterm Guide: Kimchi, Behavioral Economics, Marginal Product
Document Summary
If the demand curve is elastic, then it will not be steep. When the government imposes a price floor above the equilibrium price in a market, consumer surplus will fall and total surplus will fall. If a quota is imposed on the market for taxi rides, quota rent is created. Factors determining the price elasticity of demand are the availability of close substitutes and share of income spent on the good. If a cd of taylor swift and a cd of bruno mars are substitutes, a decrease in the price of a cd of bruno mars will decrease demand for the cd of taylor swift. The ricardian model of international trade analyzes international trade under the assumption that opportunity costs are constant. According to the ability-to-pay principle of tax fairness, those with greater ability to pay tax should pay more tax.
