SPEA V202 Midterm Exam 1 – Questions With
Right Solutions
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Practice questions for this set
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In the orange market, demand rises because of a health craze, while supply is
unchanged. What will happen?
Choose an answer
1 Demand 2 Price rises and quantity rises
3 Total surplus at equilibrium 4 Surplus
Don't know?
, Terms in this set (128)
Demand The whole curve shifting due to outside factors
(income, population, tastes, substitutes,
complements, expectations).
Quantity demanded Movement along the curve, caused only by a
change in the good's own price.
Factors that shift demand Income, population, tastes/preferences, prices of
related goods, and expectations about future
prices.
Factors that shift supply Input costs, technology, number of sellers, and
natural events (droughts, floods, bumpers in
harvests).
Surplus When quantity supplied > quantity demanded at the
current price. Creates downward pressure on price.
Shortage When quantity demanded > quantity supplied at the
current price. Creates upward pressure on price.
Rule for double shifts in supply and If both shift in the same direction → quantity is
demand certain, price uncertain. If they shift in opposite
directions → price is certain, quantity uncertain.
Elasticity of demand A measure of how responsive buyers are to price
changes, calculated as % change in Q ÷ % change in
P.
Elastic demand (sensitive to price changes) when elasticity > 1.
Inelastic demand (not very sensitive to price changes) when elasticity
< 1.
Right Solutions
Add to calendar
Play your way to mastery with fun games
Match Blocks Charms NEW
Practice questions for this set
Learn 1 /7 Study with Learn
In the orange market, demand rises because of a health craze, while supply is
unchanged. What will happen?
Choose an answer
1 Demand 2 Price rises and quantity rises
3 Total surplus at equilibrium 4 Surplus
Don't know?
, Terms in this set (128)
Demand The whole curve shifting due to outside factors
(income, population, tastes, substitutes,
complements, expectations).
Quantity demanded Movement along the curve, caused only by a
change in the good's own price.
Factors that shift demand Income, population, tastes/preferences, prices of
related goods, and expectations about future
prices.
Factors that shift supply Input costs, technology, number of sellers, and
natural events (droughts, floods, bumpers in
harvests).
Surplus When quantity supplied > quantity demanded at the
current price. Creates downward pressure on price.
Shortage When quantity demanded > quantity supplied at the
current price. Creates upward pressure on price.
Rule for double shifts in supply and If both shift in the same direction → quantity is
demand certain, price uncertain. If they shift in opposite
directions → price is certain, quantity uncertain.
Elasticity of demand A measure of how responsive buyers are to price
changes, calculated as % change in Q ÷ % change in
P.
Elastic demand (sensitive to price changes) when elasticity > 1.
Inelastic demand (not very sensitive to price changes) when elasticity
< 1.
