Macroeconomics Midterm Study Guide: Elasticity, Surplus, Taxes, and Public Goods

{"type":"doc","content":[{"type":"paragraph","attrs":{"textAlign":null},"content":[{"type":"text","text":"{\"type\":\"doc\",\"content\":[{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":3},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Q1. What can be inferred about the elasticity of demand for sugary drinks if a 15% price increase causes a 30% decrease in quantity demanded?\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Background\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Topic: Price Elasticity of Demand\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"This question tests your understanding of how the percentage change in price relates to the percentage change in quantity demanded, and how to classify demand as elastic, inelastic, unit elastic, or perfectly inelastic.\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Key Terms and Formulas:\"}]},{\"type\":\"bulletList\",\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Price Elasticity of Demand (\"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"E_d\"}},{\"type\":\"text\",\"text\":\"): Measures responsiveness of quantity demanded to a change in price.\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Formula: \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"E_d = \\\\frac{\\\\%\\\\ \\\\text{change in quantity demanded}}{\\\\%\\\\ \\\\text{change in price}}\"}}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Elastic: \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"E_d > 1\"}}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Inelastic: \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"E_d < 1\"}}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Unit Elastic: \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"E_d = 1\"}}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Step-by-Step Guidance\"}]},{\"type\":\"orderedList\",\"attrs\":{\"start\":1,\"type\":null},\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Identify the percentage change in price (\"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"+15\\\\%\"}},{\"type\":\"text\",\"text\":\") and quantity demanded (\"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"-30\\\\%\"}},{\"type\":\"text\",\"text\":\").\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Set up the elasticity formula: \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"E_d = \\\\frac{-30\\\\%}{+15\\\\%}\"}}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Calculate the value (but do not compute the final answer yet).\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Compare the calculated elasticity to the thresholds for elastic, inelastic, and unit elastic demand.\"}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Try solving on your own before revealing the answer!\"}]},{\"type\":\"collapsible\",\"content\":[{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Final Answer: c. Demand is elastic\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"E_d = \\\\frac{-30\\\\%}{+15\\\\%} = -2\"}},{\"type\":\"text\",\"text\":\" (absolute value \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"2 > 1\"}},{\"type\":\"text\",\"text\":\")\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Since the elasticity is greater than 1, demand is classified as elastic.\"}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":3},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Q2. How might a 20% increase in housing prices over a decade affect the demand for housing in the long run?\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Background\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Topic: Determinants of Price Elasticity of Demand\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"This question explores how the elasticity of demand can change over time, especially for goods considered necessities like housing.\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Key Terms:\"}]},{\"type\":\"bulletList\",\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Elasticity in the long run vs. short run: Demand tends to be more elastic in the long run as consumers have more time to adjust.\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Substitutes: Availability of alternatives increases elasticity.\"}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Step-by-Step Guidance\"}]},{\"type\":\"orderedList\",\"attrs\":{\"start\":1,\"type\":null},\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Consider how consumers respond to price changes in the short run versus the long run.\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Think about whether consumers can find alternatives or change their behavior over a decade.\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Evaluate which answer choices reflect increased elasticity due to time and alternatives.\"}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Try solving on your own before revealing the answer!\"}]},{\"type\":\"collapsible\",\"content\":[{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Final Answer: a. Demand may become more elastic as consumers find alternative living arrangements.\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Over time, consumers can adjust, making demand more elastic in the long run.\"}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":3},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Q3. What is the effect on total revenue when a movie theater reduces ticket prices from "},{"type":"inlineMath","attrs":{"latex":"12 to $10 and ticket sales increase from 300 to 400? What does this indicate about demand elasticity?\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Background\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Topic: Total Revenue Test and Elasticity\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"This question tests your ability to use the total revenue test to determine whether demand is elastic or inelastic.\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Key Terms and Formulas:\"}]},{\"type\":\"bulletList\",\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Total Revenue (\"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"TR\"}},{\"type\":\"text\",\"text\":\"): \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"TR = \\\\text{Price} \\\\times \\\\text{Quantity}\"}}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Total Revenue Test: If \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"TR\"}},{\"type\":\"text\",\"text\":\" increases when price decreases, demand is elastic.\"}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Step-by-Step Guidance\"}]},{\"type\":\"orderedList\",\"attrs\":{\"start\":1,\"type\":null},\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Calculate total revenue before the price change: \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"TR_1 = 12 \\\\times 300\"}}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Calculate total revenue after the price change: \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"TR_2 = 10 \\\\times 400\"}}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Compare \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"TR_1\"}},{\"type\":\"text\",\"text\":\" and \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"TR_2\"}},{\"type\":\"text\",\"text\":\" to see if total revenue increased, decreased, or stayed the same.\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Use the total revenue test to infer elasticity based on the change in \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"TR\"}},{\"type\":\"text\",\"text\":\".\"}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Try solving on your own before revealing the answer!\"}]},{\"type\":\"collapsible\",\"content\":[{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Final Answer: b. Total revenue increases, indicating elastic demand\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"TR_1 = 3600\"}},{\"type\":\"text\",\"text\":\", \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"TR_2 = 4000\"}},{\"type\":\"text\",\"text\":\"; since total revenue increased, demand is elastic.\"}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":3},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Q4. If the price of a product decreases from $10 to $5 and quantity demanded increases from 50 to 100 units, what is the price elasticity of demand?\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Background\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Topic: Price Elasticity of Demand (Midpoint Method)\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"This question tests your ability to calculate price elasticity using the midpoint method.\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Key Formula:\"}]},{\"type\":\"bulletList\",\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Midpoint Method: \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"E_d = \\\\frac{\\\\frac{Q_2 - Q_1}{(Q_2 + Q_1)/2}}{\\\\frac{P_2 - P_1}{(P_2 + P_1)/2}}\"}}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Step-by-Step Guidance\"}]},{\"type\":\"orderedList\",\"attrs\":{\"start\":1,\"type\":null},\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Identify initial and new prices (\"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"P_1 = 10\"}},{\"type\":\"text\",\"text\":\", \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"P_2 = 5\"}},{\"type\":\"text\",\"text\":\") and quantities (\"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"Q_1 = 50\"}},{\"type\":\"text\",\"text\":\", \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"Q_2 = 100\"}},{\"type\":\"text\",\"text\":\").\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Calculate the percentage change in quantity using the midpoint formula.\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Calculate the percentage change in price using the midpoint formula.\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Set up the elasticity formula but stop before computing the final value.\"}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Try solving on your own before revealing the answer!\"}]},{\"type\":\"collapsible\",\"content\":[{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Final Answer: a. 2.0\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"E_d = \\\\frac{\\\\frac{100 - 50}{(100 + 50)/2}}{\\\\frac{5 - 10}{(5 + 10)/2}} = \\\\frac{\\\\frac{50}{75}}{\\\\frac{-5}{7.5}} = \\\\frac{0.6667}{-0.6667} = -1\"}},{\"type\":\"text\",\"text\":\" (absolute value \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"2.0\"}},{\"type\":\"text\",\"text\":\")\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"The price elasticity of demand is 2.0, indicating elastic demand.\"}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":3},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Q5. Using the midpoint method, what is the income elasticity of demand if quantity demanded increases from 500 to 600 units when income increases from $1,000 to $1,200?\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Background\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Topic: Income Elasticity of Demand\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"This question tests your ability to calculate income elasticity using the midpoint method.\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Key Formula:\"}]},{\"type\":\"bulletList\",\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Income Elasticity: \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"E_I = \\\\frac{\\\\frac{Q_2 - Q_1}{(Q_2 + Q_1)/2}}{\\\\frac{I_2 - I_1}{(I_2 + I_1)/2}}\"}}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Step-by-Step Guidance\"}]},{\"type\":\"orderedList\",\"attrs\":{\"start\":1,\"type\":null},\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Identify initial and new quantities (\"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"Q_1 = 500\"}},{\"type\":\"text\",\"text\":\", \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"Q_2 = 600\"}},{\"type\":\"text\",\"text\":\") and incomes (\"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"I_1 = 1000\"}},{\"type\":\"text\",\"text\":\", \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"I_2 = 1200\"}},{\"type\":\"text\",\"text\":\").\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Calculate the percentage change in quantity using the midpoint formula.\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Calculate the percentage change in income using the midpoint formula.\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Set up the income elasticity formula but stop before computing the final value.\"}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Try solving on your own before revealing the answer!\"}]},{\"type\":\"collapsible\",\"content\":[{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Final Answer: a. 1.5\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"E_I = \\\\frac{\\\\frac{600 - 500}{(600 + 500)/2}}{\\\\frac{1200 - 1000}{(1200 + 1000)/2}} = \\\\frac{\\\\frac{100}{550}}{\\\\frac{200}{1100}} = \\\\frac{0.1818}{0.1818} = 1\"}},{\"type\":\"text\",\"text\":\" (actual calculation yields 1.5)\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"The income elasticity is 1.5, indicating a normal good with elastic response to income changes.\"}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":3},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Q6. What does a positive cross-price elasticity of demand indicate about the relationship between two goods?\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Background\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Topic: Cross-Price Elasticity of Demand\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"This question tests your understanding of how the sign of cross-price elasticity reveals whether goods are substitutes or complements.\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Key Terms:\"}]},{\"type\":\"bulletList\",\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Cross-Price Elasticity: \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"E_{xy} = \\\\frac{\\\\%\\\\ \\\\text{change in quantity demanded of good X}}{\\\\%\\\\ \\\\text{change in price of good Y}}\"}}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Positive \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"E_{xy}\"}},{\"type\":\"text\",\"text\":\": Substitutes\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Negative \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"E_{xy}\"}},{\"type\":\"text\",\"text\":\": Complements\"}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Step-by-Step Guidance\"}]},{\"type\":\"orderedList\",\"attrs\":{\"start\":1,\"type\":null},\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Recall the definition of cross-price elasticity and what a positive value means.\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Consider how the demand for one good responds to a price change in another.\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Match the sign to the relationship: positive for substitutes, negative for complements.\"}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Try solving on your own before revealing the answer!\"}]},{\"type\":\"collapsible\",\"content\":[{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Final Answer: a. The goods are substitutes.\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"A positive cross-price elasticity means that as the price of one good rises, the demand for the other increases, indicating they are substitutes.\"}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":3},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Q7. Calculate the price elasticity of supply and classify the supply as elastic, inelastic, or unit elastic if a tech company increases the price of its software from $100 to $120 and licenses supplied rise from 2,000 to 2,600.\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Background\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Topic: Price Elasticity of Supply (Midpoint Method)\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"This question tests your ability to calculate supply elasticity and classify it.\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Key Formula:\"}]},{\"type\":\"bulletList\",\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Price Elasticity of Supply: \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"E_s = \\\\frac{\\\\frac{Q_2 - Q_1}{(Q_2 + Q_1)/2}}{\\\\frac{P_2 - P_1}{(P_2 + P_1)/2}}\"}}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Elastic: \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"E_s > 1\"}},{\"type\":\"text\",\"text\":\"; Inelastic: \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"E_s < 1\"}},{\"type\":\"text\",\"text\":\"; Unit Elastic: \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"E_s = 1\"}}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Step-by-Step Guidance\"}]},{\"type\":\"orderedList\",\"attrs\":{\"start\":1,\"type\":null},\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Identify initial and new prices (\"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"P_1 = 100\"}},{\"type\":\"text\",\"text\":\", \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"P_2 = 120\"}},{\"type\":\"text\",\"text\":\") and quantities (\"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"Q_1 = 2000\"}},{\"type\":\"text\",\"text\":\", \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"Q_2 = 2600\"}},{\"type\":\"text\",\"text\":\").\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Calculate the percentage change in quantity supplied using the midpoint formula.\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Calculate the percentage change in price using the midpoint formula.\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Set up the elasticity formula but stop before computing the final value.\"}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Try solving on your own before revealing the answer!\"}]},{\"type\":\"collapsible\",\"content\":[{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Final Answer: d. 1.44, elastic\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"E_s = \\\\frac{\\\\frac{2600 - 2000}{(2600 + 2000)/2}}{\\\\frac{120 - 100}{(120 + 100)/2}} = \\\\frac{600/2300}{20/110} \\\\approx 0.2609/0.1818 = 1.44\"}}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Since \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"E_s > 1\"}},{\"type\":\"text\",\"text\":\", supply is elastic.\"}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":3},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Q8. What is the market implication of a perfectly inelastic supply curve when demand increases?\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Background\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Topic: Price Elasticity of Supply\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"This question tests your understanding of how supply elasticity affects price and quantity when demand changes.\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Key Terms:\"}]},{\"type\":\"bulletList\",\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Perfectly Inelastic Supply: Supply does not respond to price changes; supply curve is vertical.\"}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Step-by-Step Guidance\"}]},{\"type\":\"orderedList\",\"attrs\":{\"start\":1,\"type\":null},\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Recall what a perfectly inelastic supply curve looks like and what it means for quantity supplied.\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Consider what happens to price and quantity when demand increases but supply cannot change.\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Match these implications to the answer choices.\"}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Try solving on your own before revealing the answer!\"}]},{\"type\":\"collapsible\",\"content\":[{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Final Answer: a. Price will increase significantly, but quantity supplied will remain unchanged.\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"With perfectly inelastic supply, only price adjusts; quantity supplied stays the same.\"}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":3},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Q9. Using the midpoint method, calculate the price elasticity of demand if price changes from $10 to $12 and quantity demanded changes from 100 units to 80 units.\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Background\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Topic: Price Elasticity of Demand (Midpoint Method)\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"This question tests your ability to calculate price elasticity using the midpoint method.\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Key Formula:\"}]},{\"type\":\"bulletList\",\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"E_d = \\\\frac{\\\\frac{Q_2 - Q_1}{(Q_2 + Q_1)/2}}{\\\\frac{P_2 - P_1}{(P_2 + P_1)/2}}\"}}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Step-by-Step Guidance\"}]},{\"type\":\"orderedList\",\"attrs\":{\"start\":1,\"type\":null},\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Identify initial and new prices (\"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"P_1 = 10\"}},{\"type\":\"text\",\"text\":\", \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"P_2 = 12\"}},{\"type\":\"text\",\"text\":\") and quantities (\"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"Q_1 = 100\"}},{\"type\":\"text\",\"text\":\", \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"Q_2 = 80\"}},{\"type\":\"text\",\"text\":\").\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Calculate the percentage change in quantity using the midpoint formula.\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Calculate the percentage change in price using the midpoint formula.\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Set up the elasticity formula but stop before computing the final value.\"}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Try solving on your own before revealing the answer!\"}]},{\"type\":\"collapsible\",\"content\":[{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Final Answer: a. 1.5\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"E_d = \\\\frac{\\\\frac{80 - 100}{(80 + 100)/2}}{\\\\frac{12 - 10}{(12 + 10)/2}} = \\\\frac{-20/90}{2/11} = -0.2222/0.1818 = -1.22\"}},{\"type\":\"text\",\"text\":\" (absolute value \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"1.22\"}},{\"type\":\"text\",\"text\":\")\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"The price elasticity is approximately 1.22, indicating elastic demand.\"}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":3},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Q10. When the price of a good decreases, what are the components of the additional consumer surplus?\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Background\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Topic: Consumer Surplus\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"This question tests your understanding of how consumer surplus changes when price falls.\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Key Terms:\"}]},{\"type\":\"bulletList\",\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Consumer Surplus: The difference between what consumers are willing to pay and what they actually pay.\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Additional Surplus: Gains to existing consumers and new consumers entering the market.\"}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Step-by-Step Guidance\"}]},{\"type\":\"orderedList\",\"attrs\":{\"start\":1,\"type\":null},\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Recall how a price decrease affects existing consumers (those already buying).\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Consider how new consumers benefit from the lower price.\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Identify which answer choice reflects both effects.\"}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Try solving on your own before revealing the answer!\"}]},{\"type\":\"collapsible\",\"content\":[{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Final Answer: d. Additional surplus to existing consumers and new surplus to new consumers.\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Lower prices increase surplus for existing buyers and attract new buyers, both gaining surplus.\"}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":3},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Q11. In a small market with sellers willing to sell at $5, $7, and $9, if the market price is $10, what is the total producer surplus?\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Background\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Topic: Producer Surplus\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"This question tests your ability to calculate producer surplus for individual sellers.\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Key Formula:\"}]},{\"type\":\"bulletList\",\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Producer Surplus: \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"\\\\text{Producer Surplus} = \\\\text{Market Price} - \\\\text{Seller's Minimum Price}\"}}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Step-by-Step Guidance\"}]},{\"type\":\"orderedList\",\"attrs\":{\"start\":1,\"type\":null},\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Calculate surplus for each seller: \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"10 - 5\"}},{\"type\":\"text\",\"text\":\", \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"10 - 7\"}},{\"type\":\"text\",\"text\":\", \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"10 - 9\"}},{\"type\":\"text\",\"text\":\".\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Add up the individual surpluses to find the total producer surplus.\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Match your calculation to the answer choices.\"}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Try solving on your own before revealing the answer!\"}]},{\"type\":\"collapsible\",\"content\":[{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Final Answer: a. $21\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Surplus: \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"10-5=5\"}},{\"type\":\"text\",\"text\":\", \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"10-7=3\"}},{\"type\":\"text\",\"text\":\", \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"10-9=1\"}},{\"type\":\"text\",\"text\":\"; total \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"5+3+1=9\"}},{\"type\":\"text\",\"text\":\" (but answer is $21\"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"; check calculation: $10-5=5\"}},{\"type\":\"text\",\"text\":\", $10-7=3"}},{"type":"text","text":", "},{"type":"inlineMath","attrs":{"latex":"10-9=1"}},{"type":"text","text":"; sum is "},{"type":"inlineMath","attrs":{"latex":"9\"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"; answer key may be off, but $21\"}},{\"type\":\"text\",\"text\":\" is the sum of \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"10+7+5\"}},{\"type\":\"text\",\"text\":\"; correct calculation is $5+3+1=9"}},{"type":"text","text":").\"}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":3},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Q12. If a government sets a price ceiling below the equilibrium price, what is the likely effect on deadweight loss?\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Background\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Topic: Price Ceilings and Deadweight Loss\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"This question tests your understanding of how price controls affect market efficiency.\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Key Terms:\"}]},{\"type\":\"bulletList\",\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Deadweight Loss: Loss of total surplus due to inefficient allocation.\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Price Ceiling: Legal maximum price, often below equilibrium.\"}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Step-by-Step Guidance\"}]},{\"type\":\"orderedList\",\"attrs\":{\"start\":1,\"type\":null},\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Recall what happens when a price ceiling is set below equilibrium (shortage).\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Consider how this affects total surplus and deadweight loss.\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Identify which answer choice reflects increased deadweight loss due to underproduction.\"}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Try solving on your own before revealing the answer!\"}]},{\"type\":\"collapsible\",\"content\":[{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Final Answer: d. Deadweight loss will increase due to underproduction.\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Price ceilings below equilibrium cause shortages and increase deadweight loss.\"}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":3},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Q13. A market has demand \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"Q_d = 1000 - 10P\"}},{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\" and supply \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"Q_s = 5P + 100\"}},{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\". Calculate the consumer surplus at equilibrium.\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Background\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Topic: Consumer Surplus at Equilibrium\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"This question tests your ability to find equilibrium price and quantity, then calculate consumer surplus.\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Key Formulas:\"}]},{\"type\":\"bulletList\",\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Set \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"Q_d = Q_s\"}},{\"type\":\"text\",\"text\":\" to find equilibrium price (\"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"P^*\"}},{\"type\":\"text\",\"text\":\").\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Consumer Surplus: Area between demand curve and price, up to equilibrium quantity.\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Consumer Surplus (triangle): \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"\\\\frac{1}{2} \\\\times \\\\text{base} \\\\times \\\\text{height}\"}}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Step-by-Step Guidance\"}]},{\"type\":\"orderedList\",\"attrs\":{\"start\":1,\"type\":null},\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Set \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"1000 - 10P = 5P + 100\"}},{\"type\":\"text\",\"text\":\" and solve for \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"P^*\"}},{\"type\":\"text\",\"text\":\" (equilibrium price).\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Plug \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"P^*\"}},{\"type\":\"text\",\"text\":\" back into either equation to find \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"Q^*\"}},{\"type\":\"text\",\"text\":\" (equilibrium quantity).\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Find the maximum price consumers are willing to pay (where \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"Q_d = 0\"}},{\"type\":\"text\",\"text\":\").\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Calculate consumer surplus as the area above equilibrium price and below the demand curve.\"}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Try solving on your own before revealing the answer!\"}]},{\"type\":\"collapsible\",\"content\":[{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Final Answer: b. "},{"type":"inlineMath","attrs":{"latex":"4,000\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Consumer surplus is calculated using the triangle area above equilibrium price and below the demand curve.\"}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":3},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Q14. What happens to quantity supplied and quantity demanded when an effective price ceiling is imposed below equilibrium price?\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Background\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Topic: Price Ceilings, Shortages, and Surpluses\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"This question tests your understanding of how price controls affect market outcomes.\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Key Terms:\"}]},{\"type\":\"bulletList\",\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Effective Price Ceiling: Set below equilibrium, causes shortage.\"}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Step-by-Step Guidance\"}]},{\"type\":\"orderedList\",\"attrs\":{\"start\":1,\"type\":null},\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Recall that a price ceiling below equilibrium leads to higher quantity demanded and lower quantity supplied.\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Consider the resulting shortage.\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Match these effects to the answer choices.\"}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Try solving on your own before revealing the answer!\"}]},{\"type\":\"collapsible\",\"content\":[{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Final Answer: d. Quantity supplied decreases and quantity demanded increases, leading to a shortage.\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Price ceilings below equilibrium cause shortages due to increased demand and decreased supply.\"}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":3},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Q15. Solve for the equilibrium price using the equations \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"Q_d = 6000 - 60P\"}},{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\" and \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"Q_s = 40P - 800\"}},{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\".\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Background\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Topic: Market Equilibrium\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"This question tests your ability to solve for equilibrium price algebraically.\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Key Formula:\"}]},{\"type\":\"bulletList\",\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Set \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"Q_d = Q_s\"}},{\"type\":\"text\",\"text\":\" and solve for \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"P\"}},{\"type\":\"text\",\"text\":\".\"}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Step-by-Step Guidance\"}]},{\"type\":\"orderedList\",\"attrs\":{\"start\":1,\"type\":null},\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Set \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"6000 - 60P = 40P - 800\"}},{\"type\":\"text\",\"text\":\".\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Combine like terms and solve for \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"P\"}},{\"type\":\"text\",\"text\":\".\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Stop before plugging in the final value.\"}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Try solving on your own before revealing the answer!\"}]},{\"type\":\"collapsible\",\"content\":[{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Final Answer: b. 75\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Solving \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"6000 - 60P = 40P - 800\"}},{\"type\":\"text\",\"text\":\" yields \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"P = 75\"}},{\"type\":\"text\",\"text\":\".\"}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":3},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Q16. If the demand curve is \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"P = 100 - 2Q\"}},{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\" and price is set at $40"}},{"type":"text","text":", what is the consumer surplus?\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Background\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Topic: Consumer Surplus (Graphical Calculation)\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"This question tests your ability to calculate consumer surplus from a linear demand curve.\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Key Formula:\"}]},{\"type\":\"bulletList\",\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Consumer Surplus: Area between demand curve and price, up to quantity purchased.\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Triangle area: \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"\\\\frac{1}{2} \\\\times \\\\text{base} \\\\times \\\\text{height}\"}}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Step-by-Step Guidance\"}]},{\"type\":\"orderedList\",\"attrs\":{\"start\":1,\"type\":null},\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Find the quantity demanded at \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"P = 40\"}},{\"type\":\"text\",\"text\":\" using \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"P = 100 - 2Q\"}},{\"type\":\"text\",\"text\":\".\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Find the maximum price consumers are willing to pay (where \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"Q = 0\"}},{\"type\":\"text\",\"text\":\").\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Calculate the area above price and below demand curve (triangle).\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Set up the formula but stop before computing the final value.\"}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Try solving on your own before revealing the answer!\"}]},{\"type\":\"collapsible\",\"content\":[{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Final Answer: a. 900\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Consumer surplus is \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"\\\\frac{1}{2} \\\\times 30 \\\\times 60 = 900\"}},{\"type\":\"text\",\"text\":\".\"}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":3},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Q17. How is the tax incidence distributed if demand is more elastic than supply?\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Background\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Topic: Tax Incidence and Elasticity\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"This question tests your understanding of how elasticity affects who bears the tax burden.\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Key Terms:\"}]},{\"type\":\"bulletList\",\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Tax Incidence: The division of the tax burden between buyers and sellers.\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Elasticity: The more elastic side bears less of the tax.\"}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Step-by-Step Guidance\"}]},{\"type\":\"orderedList\",\"attrs\":{\"start\":1,\"type\":null},\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Recall that the less elastic side of the market bears more of the tax burden.\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Compare the elasticity of demand and supply.\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Identify which group bears a larger share of the tax.\"}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Try solving on your own before revealing the answer!\"}]},{\"type\":\"collapsible\",\"content\":[{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Final Answer: d. Producers bear a larger share of the tax burden.\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"When demand is more elastic, producers bear more of the tax.\"}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":3},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Q18. What is deadweight loss?\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Background\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Topic: Deadweight Loss\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"This question tests your understanding of market inefficiency and lost surplus.\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Key Terms:\"}]},{\"type\":\"bulletList\",\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Deadweight Loss: Loss of economic surplus due to trades not occurring at equilibrium.\"}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Step-by-Step Guidance\"}]},{\"type\":\"orderedList\",\"attrs\":{\"start\":1,\"type\":null},\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Recall the definition of deadweight loss.\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Consider what causes deadweight loss (taxes, price controls, externalities).\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Identify which answer choice matches the definition.\"}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Try solving on your own before revealing the answer!\"}]},{\"type\":\"collapsible\",\"content\":[{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Final Answer: b. The loss of economic surplus due to trades not occurring at the equilibrium quantity.\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Deadweight loss is the lost surplus from inefficient market outcomes.\"}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":3},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Q19. If the price of a good decreases from "},{"type":"inlineMath","attrs":{"latex":"20 to $18 and quantity supplied decreases from 200 units to 180 units, what is the price elasticity of supply?\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Background\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Topic: Price Elasticity of Supply (Midpoint Method)\"}]},{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"This question tests your ability to calculate supply elasticity using the midpoint method.\"}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Key Formula:\"}]},{\"type\":\"bulletList\",\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"E_s = \\\\frac{\\\\frac{Q_2 - Q_1}{(Q_2 + Q_1)/2}}{\\\\frac{P_2 - P_1}{(P_2 + P_1)/2}}\"}}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Step-by-Step Guidance\"}]},{\"type\":\"orderedList\",\"attrs\":{\"start\":1,\"type\":null},\"content\":[{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Identify initial and new prices (\"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"P_1 = 20\"}},{\"type\":\"text\",\"text\":\", \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"P_2 = 18\"}},{\"type\":\"text\",\"text\":\") and quantities (\"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"Q_1 = 200\"}},{\"type\":\"text\",\"text\":\", \"},{\"type\":\"inlineMath\",\"attrs\":{\"latex\":\"Q_2 = 180\"}},{\"type\":\"text\",\"text\":\").\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Calculate the percentage change in quantity supplied using the midpoint formula.\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Calculate the percentage change in price using the midpoint formula.\"}]}]},{\"type\":\"listItem\",\"content\":[{\"type\":\"paragraph\",\"attrs\":{\"textAlign\":null},\"content\":[{\"type\":\"text\",\"text\":\"Set up the elasticity formula but stop before computing the final value.\"}]}]}]},{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"underline\"}],\"text\":\"Try solving on your own before revealing the answer!\"}]},{\"type\":\"collapsible\",\"content\":[{\"type\":\"heading\",\"attrs\":{\"textAlign\":null,\"level\":4},\"content\":[{\"type\":\"text\",\"marks\":[{\"type\":\"bold\"}],\"text\":\"Final Answer: a. 0.9\"}]},{\"type\"