Exam 5: Some Applications of Consumer Demand, and Welfare Analysis

Consumer surplus is the difference between what a producer receives for the goods it produces and the cost of producing them.

As Calvin Yoshino purchases more leisure, he devotes _______ time to work.

Researchers studying labor supply decisions of New York City cab drivers discovered that the time horizons of the drivers are

A characteristic of demand for a good where, at a given price, a 1% change in the price leads to exactly a 1% change in the quantity demanded is called unitary elastic demand.

Jeffrey Bafilo's demand function for economics textbooks is Q = 1,001 - 10p. At a market price of $100 per book, what is Jeffrey's consumer surplus?

If we represent an agent's preferences by a(n) __________ utility function, then the way we number the agent's indifference curves does not affect the demands made by the agent.

The fact that policies aimed at reducing crime may actually increase it if crime is an inferior enough good and the income effect of the crime prevention policies is big enough is known as the

The paradox of crime prevention is partly explained by

-Refer to Exhibit 5-1. Which demand curve has elasticity that varies along its length?

The following is Dave's demand schedule for music downloads: Quantity Price 1 2.50 2 2.00 3 1.50 4 1.00 5 0.50 If a firm is selling downloads at $1.00 and then Dave obtains a promotional code that allows him to download for $0.50 each, what is the gain in consumer surplus to Dave?

A demand curve that is horizontal and in which a zero quantity will be sold at any price above a given price p while, at price p, any quantity can be sold is called a(n)

-Refer to Exhibit 5-1. Which demand curve is perfectly inelastic?

The Slutsky equation identifies the minimum amount of income that we must give a consumer in order to allow the consumer to achieve a predetermined level of utility at given prices.

Describe the difference between a perfectly inelastic demand curve and a perfectly elastic demand curve.

Income elasticity of demand is the percentage change in the

Kristen's earnings from a California escort service are known as her

The budget of a consumer will be exhausted because any consumer is ________ satiated and, therefore, will always be able to increase utility by consuming _______.

A curve that represents graphically the relationship between the quantity of a good demanded by a consumer and the price of that good as the price varies is called the market demand curve.

The process of deriving the market demand curve is purely hypothetical because

Just as a demand function can be derived from the process of utility _______________, given the consumer's income and the prices, an expenditure function can be derived by a process of income _______________, given the predetermined level of utility for the consumer and the prices.