Microeconomics Exam 1 - Assignment Essays %

question

price

answer

one variable that causes a movement along the demand curve or a CHANGE IN QUANTITY DEMANDED. one variable that cases a movement along the supply curve or a CHANGE IN QUANTITY SUPPLIED

question

2 types of related goods

answer

substitute and complementary goods

question

substitute goods

answer

a product of service that can easily be replaced by another

question

complementary goods

answer

Goods that are commonly used with other goods

question

5 variables that case a shift in the individual's demand curve or a CHANGE in demand:

answer

1. prices of related goods
2. income
3. tastes
4. price expectations
5. # of consumers

question

Normal goods

answer

Goods for which demand goes up when income is higher and for which demand goes down when income is lower.

question

inferior goods

answer

Goods for which demand tends to fall when income rises. consumers more inclined to buy in this case

question

4 variables that cause a shift in the individual's supply curve or a change in supply

answer

1. input prices
2. technology
3. prices of related good
4. # of producers

question

Law of demand

answer

the lower the price, the greater quantity demanded. the higher the price, the lower the quantity demanded. HOLDING ALL OTHER THINGS CONSTANT

question

price elasticity of demand formula

answer

Ed= (% change in the quantity)/(% change of price)
Or
Ed= [(Q2-Q1)/(Q1+Q2/2)]/[(P2-P1)/(P1+P2/2)]

question

midpoints formula

answer

E=(change in QD/change in P) X (P1+P2/Q1+Q2)

question

total revenue

answer

Price x Quantity

question

3 determinants of the price elasticity of demand

answer

1. availability of close substitutes
2. importance of cost in one's budget
3. period of time under consideration

question

constant opportunity cost

answer

A steady potential price to a business that occurs when a company does not take advantage of a feasible chance to earn profits

question

quantity demanded

answer

measures how much of a good that an individual desires at each price

question

quantity supplied

answer

measures how much of a good a producer desires to sell at each price

question

price ceiling

answer

an effective price that is set by gov below the equilibrium price ex: rent control

question

price floors

answer

an effective one is set above the equilibrium price ex: minimum wage

question

elasticity

answer

a measure of the responsiveness of quantity demanded or quantity supplied to a change in one of its determinants. (% change in QD/ % in price)

question

inelastic demand

answer

demand in absolute values that ranges from 0-1

question

tax incidence

answer

answers question of: who pays?

question

statutory incidence

answer

law written and creates a tax at the federal level

question

unity

answer

measures consumer satisfaction

question

marginal/additional utility

answer

what is the additional satisfaction if an additional unit of a good

1 of 24

question

price

answer

one variable that causes a movement along the demand curve or a CHANGE IN QUANTITY DEMANDED. one variable that cases a movement along the supply curve or a CHANGE IN QUANTITY SUPPLIED

question

2 types of related goods

answer

substitute and complementary goods

question

substitute goods

answer

a product of service that can easily be replaced by another

question

complementary goods

answer

Goods that are commonly used with other goods

question

5 variables that case a shift in the individual's demand curve or a CHANGE in demand:

answer

1. prices of related goods
2. income
3. tastes
4. price expectations
5. # of consumers

question

Normal goods

answer

Goods for which demand goes up when income is higher and for which demand goes down when income is lower.

question

inferior goods

answer

Goods for which demand tends to fall when income rises. consumers more inclined to buy in this case

question

4 variables that cause a shift in the individual's supply curve or a change in supply

answer

1. input prices
2. technology
3. prices of related good
4. # of producers

question

Law of demand

answer

the lower the price, the greater quantity demanded. the higher the price, the lower the quantity demanded. HOLDING ALL OTHER THINGS CONSTANT

question

price elasticity of demand formula

answer

Ed= (% change in the quantity)/(% change of price)
Or
Ed= [(Q2-Q1)/(Q1+Q2/2)]/[(P2-P1)/(P1+P2/2)]

question

midpoints formula

answer

E=(change in QD/change in P) X (P1+P2/Q1+Q2)

question

total revenue

answer

Price x Quantity

question

3 determinants of the price elasticity of demand

answer

1. availability of close substitutes
2. importance of cost in one's budget
3. period of time under consideration

question

constant opportunity cost

answer

A steady potential price to a business that occurs when a company does not take advantage of a feasible chance to earn profits

question

quantity demanded

answer

measures how much of a good that an individual desires at each price

question

quantity supplied

answer

measures how much of a good a producer desires to sell at each price

question

price ceiling

answer

an effective price that is set by gov below the equilibrium price ex: rent control

question

price floors

answer

an effective one is set above the equilibrium price ex: minimum wage

question

elasticity

answer

a measure of the responsiveness of quantity demanded or quantity supplied to a change in one of its determinants. (% change in QD/ % in price)

question

inelastic demand

answer

demand in absolute values that ranges from 0-1

question

tax incidence

answer

answers question of: who pays?

question

statutory incidence

answer

law written and creates a tax at the federal level

question

unity

answer

measures consumer satisfaction

question

marginal/additional utility

answer

what is the additional satisfaction if an additional unit of a good

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