econ quiz 2

excise tax: long run (elastic)

paid for by customers

excise tax: short run (inelastc)

paid for by producers

adverse selection

informational imbalance between two parties in a transaction

predatory practice

seeking to profit off someone’s vulnerability or ignorance

public good

something that one provided for one individual, anyone can use

elasticity

sensitivity of demand to price changes

elastic

the demand changes significantly in response to price changes (the flatter the demand line)

inelastic

the demand does not change much in response to price changes (aka. baby formula) (the steeper the demand line)

influences on inelasticity

lack of substitutes, necessity, income levels

influences on elasticity

substitutes, not a necessity, lower income leaves will find something else