ECON 300 MIDTERM 1 QUESTIONS
AND CORRECT ANSWERS WITH
COMPLETE VERIFIED SOLUTION |
ALREADY GRADED A+ | 2026-2027
LATEST UPDATE!!!
4 key assumptions of the economic model - ANSWER-supply and
Demand in a single market
all goods in the market are identical
all goods sold in the market sell for the same price, and everyone has
the same info
there are many producers and consumers
All else equal, a demand increase - ANSWER-causes both consumer
and producer surplus to increase.
An increase in income, holding prices constant, can be represented as:
- ANSWER-a parallel outward shift in the budget line.
,Assume that steak and potatoes are complements. When the price of
steak goes up, the demand curve for potatoes: - ANSWER-shifts to the
left
budget constraint - ANSWER-curve that describes entire set of
consumption bundles a consumer can purchase when spending all
income
inside= feasible
outside= infeasible
income= PxQx+ PyQy
change in demand - ANSWER-SHIFT of demand curve
result of change in a determinant of demand other than the goods
price
change in quantity demanded - ANSWER-movement ALONG demand
curve
result of change in goods price
change in supply - ANSWER-SHIFT of supply curve cause by a change in
a determinant of supply other than price
changes in quantity supplied - ANSWER-movement ALONG supply
curve that occurs as a result of a change in good's price
characteristic of indifference curve - ANSWER---always draw them
, --figure out which indifference curve has higher utility and why they
slope down
-- they never cross
--are convex at the origin
commodities - ANSWER-products traded in markets in which
consumers view different varieties of the good as essentially
interchangeable
complements - ANSWER-good that is purchased and used IN
COMBINATION with another good
consumer surplus - ANSWER-difference b/w amount consumers are
willing to pay for a good/service and the amount they actually have to
pay
Consumption bundle - ANSWER-set of goods/service a consumer
considers purchasing
corner solution - ANSWER-utility maximizing bundle located at the
corner of the budget constant where the consumer purchases ONE of
the two goods
cross price elasticity of demand - ANSWER-% change in quantity
demanded of 1 good associated w/ 1% change in another good
E= %change in Q ÷ % change in Y
deadweight loss DWL - ANSWER-reduction in total surplus that occurs
as a result of market inefficiency
AND CORRECT ANSWERS WITH
COMPLETE VERIFIED SOLUTION |
ALREADY GRADED A+ | 2026-2027
LATEST UPDATE!!!
4 key assumptions of the economic model - ANSWER-supply and
Demand in a single market
all goods in the market are identical
all goods sold in the market sell for the same price, and everyone has
the same info
there are many producers and consumers
All else equal, a demand increase - ANSWER-causes both consumer
and producer surplus to increase.
An increase in income, holding prices constant, can be represented as:
- ANSWER-a parallel outward shift in the budget line.
,Assume that steak and potatoes are complements. When the price of
steak goes up, the demand curve for potatoes: - ANSWER-shifts to the
left
budget constraint - ANSWER-curve that describes entire set of
consumption bundles a consumer can purchase when spending all
income
inside= feasible
outside= infeasible
income= PxQx+ PyQy
change in demand - ANSWER-SHIFT of demand curve
result of change in a determinant of demand other than the goods
price
change in quantity demanded - ANSWER-movement ALONG demand
curve
result of change in goods price
change in supply - ANSWER-SHIFT of supply curve cause by a change in
a determinant of supply other than price
changes in quantity supplied - ANSWER-movement ALONG supply
curve that occurs as a result of a change in good's price
characteristic of indifference curve - ANSWER---always draw them
, --figure out which indifference curve has higher utility and why they
slope down
-- they never cross
--are convex at the origin
commodities - ANSWER-products traded in markets in which
consumers view different varieties of the good as essentially
interchangeable
complements - ANSWER-good that is purchased and used IN
COMBINATION with another good
consumer surplus - ANSWER-difference b/w amount consumers are
willing to pay for a good/service and the amount they actually have to
pay
Consumption bundle - ANSWER-set of goods/service a consumer
considers purchasing
corner solution - ANSWER-utility maximizing bundle located at the
corner of the budget constant where the consumer purchases ONE of
the two goods
cross price elasticity of demand - ANSWER-% change in quantity
demanded of 1 good associated w/ 1% change in another good
E= %change in Q ÷ % change in Y
deadweight loss DWL - ANSWER-reduction in total surplus that occurs
as a result of market inefficiency
