Study Guide 

What are the factors that determine demand?

1. A Change in the expectations of consumer about their future income with create... a. Movement along the demand curve

b. Shift of the demand curve

2. An increase in the number of consumers with create…

a. Movement along the demand curve

b. Shift in the demand curve

3. A decrease in the price of wine will create…

a. Movement along the demand curve

b. Shift in demand curve

4. What are the factors that determine demand?  

5. What are the factors that determine supply?  

6. If a shortage exists in the market, then the current price must be (lower/higher)  than the equilibrium price. For the market to reach equilibrium, you would expect  (persistent excess demand/sellers to offer lower prices/ buyers to offer higher  prices)

7. True or False: When both the demand and supply curve shift, the curve that shifts  the smaller magnitude determines the effect on the undetermined equilibrium  object.

What is a equilibrium?

8. What are the determinants of price elasticity of demand?  

9. A good without any close substitutes is likely to have relatively (inelastic/elastic)  demand, since consumers cannot easily switch to a substitute good if the price of  the good rises.  

10. If the following goods are prices approx. the same, which one has the least elastic demand?

a. Amputation procedures for diabetes sufferers

b. Sports car

11. The following represent what kind of elastic demand?

a. Red Bell Pepper (most/in-between/least)

b. Vegetables (most/ in-between/least)

c. Food (most/ in-between/least)

12. Compared to the short-run demand for oil, the demand for oil in the long run will  tend to be (more/less) elastic.

13. How do you know if the region is elastic/ unit elastic/ inelastic?

14. Two goods are said to be complements when what happens?  

What are the factors that determine supply?

15. Two goods are said to be substitutes when what happens?  Don't forget about the age old question of what is the meaning of micro and macro economics?

Terms to be familiar with and miscellaneous 

Quantity Demanded: The amount of a good that buyers are willing and able to purchase  at a given price

Demand Curve: A graphical object showing the relationship between the price of a good  and the amount of the good that buyers are willing and able to purchase at various prices

Demand Schedule: A table showing the relationship between the price of a good and the  amount those buyers are willing and able to purchase at various prices

Law of Demand: The claim that, with other things being equal, the quantity demanded  of a good falls when the price of that good rises If you want to learn more check out Why japanese women didn't experienced menopause?

Quantity Supplied: The amount of a good that a seller is willing and able to supply at a  given price

Supply Curve: A graphical object showing the relationship between the price of a good  and the amount those sellers are willing and able to supply at various prices

Supply Schedule: A table showing the relationships between the price of a good and the  amount of it those sellers are willing and able to supply at various prices

Law of Supply: The claim that, other things being equal, the quantity supplied of a good  increases when the price of that good rises.  

Price elasticity of demand: measures the responsiveness of consumers to change in  price.

Consumer surplus: difference between a buyers willingness to pay and the price the  buyer actually pays

Producer surplus: the difference between the price a seller actually received for an item  and the lowest price at which the seller would be willing to provide the item.  

Competitive market: a market in which there are many buyers and many sellers so that  the behavior of an individual buyer or seller has a negligible impact on the market price  

Equilibrium: when quantity demanded equals quantity supplied

Normal goods: when income goes up, demand increases (cars, TV’s, computers) Inferior goods: when income goes up, demand decreases (ramen noodles) Taxes: wedge between the price a consumer pays and the price the producer receives.  Opposite of tax: subsidy  We also discuss several other topics like How do you write a number in scientific notation?

Price ceiling: law forbidding anyone from selling a good for more than the ceiling price Price floor: law forbidding anyone form selling a good for less than the floor price

Equations: Mid-point method

Different Parts of a Graph:Don't forget about the age old question of Stratigraphy/Soil Horizons

If you want to learn more check out What is tangential acceleration?

Answers 

1. B

2. B

3. B

4. Price of a related good (complement of substitute), Income of consumers, Tastes  of consumers, Number of consumers, expectations of consumers.

5. Price of inputs, production technology, number of producers, expectations of  producers.  

6. Lower/ buyers to offer higher prices

7. False

8. The availability of close substitutes, whether the good is a necessity or a luxury,  how broadly you define the market, the time horizon being considered 9. Inelastic

10. Amputation procedures for diabetes sufferers

11. Most/in-between-least

12. More

13. Over 1 – Elastic, 1 exactly – unit elastic, below 1 - inelastic

14. An increase in the price of one good decrease the quantity demanded for the other or vice versa  

15. An increase in the price of one good increases the quantity demanded for the other  or vice versa

Study Guide 

1. A Change in the expectations of consumer about their future income with create... a. Movement along the demand curve

b. Shift of the demand curve

2. An increase in the number of consumers with create… If you want to learn more check out What are the eukaryotic cells ?

a. Movement along the demand curve

b. Shift in the demand curve

3. A decrease in the price of wine will create…

a. Movement along the demand curve

b. Shift in demand curve

4. What are the factors that determine demand?  

5. What are the factors that determine supply?  

6. If a shortage exists in the market, then the current price must be (lower/higher)  than the equilibrium price. For the market to reach equilibrium, you would expect  (persistent excess demand/sellers to offer lower prices/ buyers to offer higher  prices)

7. True or False: When both the demand and supply curve shift, the curve that shifts  the smaller magnitude determines the effect on the undetermined equilibrium  object.

8. What are the determinants of price elasticity of demand?  

9. A good without any close substitutes is likely to have relatively (inelastic/elastic)  demand, since consumers cannot easily switch to a substitute good if the price of  the good rises.  

10. If the following goods are prices approx. the same, which one has the least elastic demand?

a. Amputation procedures for diabetes sufferers

b. Sports car

11. The following represent what kind of elastic demand?

a. Red Bell Pepper (most/in-between/least)

b. Vegetables (most/ in-between/least)

c. Food (most/ in-between/least)

12. Compared to the short-run demand for oil, the demand for oil in the long run will  tend to be (more/less) elastic.

13. How do you know if the region is elastic/ unit elastic/ inelastic?

14. Two goods are said to be complements when what happens?  

15. Two goods are said to be substitutes when what happens?  

Terms to be familiar with and miscellaneous 

Quantity Demanded: The amount of a good that buyers are willing and able to purchase  at a given price

Demand Curve: A graphical object showing the relationship between the price of a good  and the amount of the good that buyers are willing and able to purchase at various prices

Demand Schedule: A table showing the relationship between the price of a good and the  amount those buyers are willing and able to purchase at various prices

Law of Demand: The claim that, with other things being equal, the quantity demanded  of a good falls when the price of that good rises

Quantity Supplied: The amount of a good that a seller is willing and able to supply at a  given price

Supply Curve: A graphical object showing the relationship between the price of a good  and the amount those sellers are willing and able to supply at various prices

Supply Schedule: A table showing the relationships between the price of a good and the  amount of it those sellers are willing and able to supply at various prices

Law of Supply: The claim that, other things being equal, the quantity supplied of a good  increases when the price of that good rises.  

Price elasticity of demand: measures the responsiveness of consumers to change in  price.

Consumer surplus: difference between a buyers willingness to pay and the price the  buyer actually pays

Producer surplus: the difference between the price a seller actually received for an item  and the lowest price at which the seller would be willing to provide the item.  

Competitive market: a market in which there are many buyers and many sellers so that  the behavior of an individual buyer or seller has a negligible impact on the market price  

Equilibrium: when quantity demanded equals quantity supplied

Normal goods: when income goes up, demand increases (cars, TV’s, computers) Inferior goods: when income goes up, demand decreases (ramen noodles) Taxes: wedge between the price a consumer pays and the price the producer receives.  Opposite of tax: subsidy  

Price ceiling: law forbidding anyone from selling a good for more than the ceiling price Price floor: law forbidding anyone form selling a good for less than the floor price

Equations: Mid-point method

Different Parts of a Graph:

Answers 

1. B

2. B

3. B

4. Price of a related good (complement of substitute), Income of consumers, Tastes  of consumers, Number of consumers, expectations of consumers.

5. Price of inputs, production technology, number of producers, expectations of  producers.  

6. Lower/ buyers to offer higher prices

7. False

8. The availability of close substitutes, whether the good is a necessity or a luxury,  how broadly you define the market, the time horizon being considered 9. Inelastic

10. Amputation procedures for diabetes sufferers

11. Most/in-between-least

12. More

13. Over 1 – Elastic, 1 exactly – unit elastic, below 1 - inelastic

14. An increase in the price of one good decrease the quantity demanded for the other or vice versa  

15. An increase in the price of one good increases the quantity demanded for the other  or vice versa