When the Price of Audio Books, a Normal Good, Falls

question 202

Multiple Choice

When the price of audio books, a normal good, falls, causing your purchasing power to rise, you buy more of them due to

• A)the substitution effect.
• B)the income effect.
• C)the deadweight loss effect.
• D)the elasticity effect.

Calculate the government revenue generated from taxes on goods and services.

Analyze how changes in elasticity affect market equilibrium and total revenue.

Understand the economic concepts of perfectly elastic and perfectly inelastic demand and supply.

Examine the impact of elasticity on consumer and producer surplus.

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