ECS2601 Unit 1 – 5 (100% Correct)

Microeconomics correct answers A branch of economics that deals with the behaviour of individual economic units. Economic Model correct answers The interacting relationship between two or more economic variables. 3 Fundamental Questions of Economics correct answers 1. What to Produce 2. How Much to Produce 3. For Whom to Produce Emergence of Price correct answers The interaction between consumers and producers interacting on the market. The Market is in Equilibrium correct answers The market is in Equilibrium with no Surplus or shortages. Thus there are no pressures for the prices to change. Market Mechanism correct answers The tendency in a free market for Price to change until the market clears. Equilibrium Price correct answers The price at which the market is in equilibrium. Thus the quantity supplied equals the quantity demanded at a specific price. Qs = Qd Disequilibrium correct answers Any point on the graph that is not at the equilibrium point. Surplus correct answers Qs Qd Shortage correct answers Qs Qd Demand Curve correct answers The quantity of goods "consumers" are willing to buy at a specific price. (Maximization of Utility) Influenced by budget constraints. Supply Curve correct answers The quantity of goods "producers" are willing to sell at a specific price. (Maximization of Profit) This is influenced by consumer demand the the costs of production. Substitutes correct answers Two goods where an increase in price causes an increase in demand for the second product. Compliment correct answers two goods where a price increases for one causes the demand to decrease for the second as they are both used together. Elasticity Definition correct answers The percentage change in one variable resulting from a 1% increase in another.