MICROECONOMICS exam 1 (ch. 13) Questions
with Correct Answers
in order to have DEMAND consumers need to have the.. - Answer ABILITY to buy
WILLINGNESS to buy
law of demand - Answer Cereris Paribus (other things remain the same), as price goes DOWN, MORE
quantities are demanded
6 Determinants of DEMAND
SHIFTS ARE CAUSED BY...
(know 4 & explain) - Answer 1. NUMBER of buyers (population changes)
2. INCOME of buyers
-normal goods v. inferior goods
-as income increases the demand for normal goods INCREASES; as income increases, the demand for
inferior goods DECREASES.
3. TASTE/PREFERENCES of consumers; people want different things which can increase/decrease
demand- if they really want something it will increase
4. EXPECTATIONS; when consumers expect price changes of certain goods; expect price to increase,
demand will go UP before the spike (get it quick!)
5. RELATED goods: substitutes/complementary goods
6. TAXES
demand curve - Answer aka: DEMAND
NEGATIVE (indirect/inverse) relationship= price goes UP, quantity goes DOWN
displays relationship of only ONE product/good
each point = QUANTITY DEMANDED
- depends on price ONLY.
, normal good - Answer a good or service whose consumption increases when income increases and falls
when income decreases (its price doesn't change)
inferior good - Answer a good or service whose consumption declines as income rises (its price doesn't
change)
substitute good - Answer products or services that can be used in place of each other.
when the price of one falls, the demand for the other product falls;
when the price of one product rises, the demand for the other product rises
complementary good - Answer products and services that are used together. when the price of one falls,
the demand for the other increases (and conversely)
DEMAND; shift to the left= - Answer DECREASE
DEMAND; shift to the right= - Answer INCREASE
in order to SUPPLY businesses need to have the.. - Answer ABILITY to supply
WILLINGNESS to supply
law of supply - Answer Cereris Paribus (other things remain the same) as prices go DOWN(UP),
LESS(MORE) quantities are supplied
think: if they're not making enough money, they won't keep supplying more goods
supply curve - Answer supply curve = supply schedule = SUPPLY
POSITIVE (direct) relationship= price goes UP, quantity goes UP
displays relationship of only ONE product/good
each point = QUANTITY SUPPLIED
- depends on price ONLY.
with Correct Answers
in order to have DEMAND consumers need to have the.. - Answer ABILITY to buy
WILLINGNESS to buy
law of demand - Answer Cereris Paribus (other things remain the same), as price goes DOWN, MORE
quantities are demanded
6 Determinants of DEMAND
SHIFTS ARE CAUSED BY...
(know 4 & explain) - Answer 1. NUMBER of buyers (population changes)
2. INCOME of buyers
-normal goods v. inferior goods
-as income increases the demand for normal goods INCREASES; as income increases, the demand for
inferior goods DECREASES.
3. TASTE/PREFERENCES of consumers; people want different things which can increase/decrease
demand- if they really want something it will increase
4. EXPECTATIONS; when consumers expect price changes of certain goods; expect price to increase,
demand will go UP before the spike (get it quick!)
5. RELATED goods: substitutes/complementary goods
6. TAXES
demand curve - Answer aka: DEMAND
NEGATIVE (indirect/inverse) relationship= price goes UP, quantity goes DOWN
displays relationship of only ONE product/good
each point = QUANTITY DEMANDED
- depends on price ONLY.
, normal good - Answer a good or service whose consumption increases when income increases and falls
when income decreases (its price doesn't change)
inferior good - Answer a good or service whose consumption declines as income rises (its price doesn't
change)
substitute good - Answer products or services that can be used in place of each other.
when the price of one falls, the demand for the other product falls;
when the price of one product rises, the demand for the other product rises
complementary good - Answer products and services that are used together. when the price of one falls,
the demand for the other increases (and conversely)
DEMAND; shift to the left= - Answer DECREASE
DEMAND; shift to the right= - Answer INCREASE
in order to SUPPLY businesses need to have the.. - Answer ABILITY to supply
WILLINGNESS to supply
law of supply - Answer Cereris Paribus (other things remain the same) as prices go DOWN(UP),
LESS(MORE) quantities are supplied
think: if they're not making enough money, they won't keep supplying more goods
supply curve - Answer supply curve = supply schedule = SUPPLY
POSITIVE (direct) relationship= price goes UP, quantity goes UP
displays relationship of only ONE product/good
each point = QUANTITY SUPPLIED
- depends on price ONLY.
