ECON 202 FINAL - LATEST
OLE MISS HAYES
EXAM
What does a market economy use prices for?
to send signals to buyers and sellers
the allocation of resources is determined by ______
prices
What do the actions of buyers and sellers establish?
a product's price
What does a government do in a command economy?
controls the market, prescribes market prices
What does the demand curve show?
the relationship between price and quantity demanded
Concept of Diminishing Marginal Utility
the more of a good consumers buy, the less an additional unit is worth to
them; consumers will purchase more of a good when the price falls
because the marginal benefit of additional unit of the good outweighs
marginal cost
Change in quantity demanded
a movement along a demand curve as a result of a change in product
price
END OF
PAGE
1
, ECON 202 FINAL - LATEST
OLE MISS HAYES
EXAM
Change in demand
a shift in the demand curve as a result of a change in an underlying
factor of demand
Determinants of Demand
price, income, tastes and preferences, prices of related goods, and
expectations
Change in quantity supplied
results from a change in product price
Change in supply
a shift in the supply curve as a result of an underlying factor of supply
What does increasing marginal cost of production (or in other
words, diminishing marginal returns) explain?
why the supply curve is upward sloping
Determinants of Supply
factors other than price that effect the quantity a seller is willing to
supply at a given price, including the number of sellers, technology,
input costs, government regulation, the price of other goods, and
producer expectations
What happens when determinants of supply are changed?
END OF
PAGE
2
, ECON 202 FINAL - LATEST
OLE MISS HAYES
EXAM
the entire supply curve will shift, either increasing or decreasing supply
at all price levels
What is equilibrium price and quantity determined by?
the intersection of demand and supply
(T/F) The demand curve is also the marginal benefit curve and the
marginal utility curve.
True
What happens when marginal benefits exceed the marginal costs of
producing a product?
allocative efficiency is not achieved in the market
What happens to equilibrium quantity when demand and supply
increase?
equilibrium quantity always increases
What happens to equilibrium price when demand and supply
increase?
if demand increases more than supply, price rises. if supply increases
more than demand, price falls. if they increase equally, price remains
unchanged
What happens to equilibrium quantity when demand and supply
decrease?
END OF
PAGE
3
OLE MISS HAYES
EXAM
What does a market economy use prices for?
to send signals to buyers and sellers
the allocation of resources is determined by ______
prices
What do the actions of buyers and sellers establish?
a product's price
What does a government do in a command economy?
controls the market, prescribes market prices
What does the demand curve show?
the relationship between price and quantity demanded
Concept of Diminishing Marginal Utility
the more of a good consumers buy, the less an additional unit is worth to
them; consumers will purchase more of a good when the price falls
because the marginal benefit of additional unit of the good outweighs
marginal cost
Change in quantity demanded
a movement along a demand curve as a result of a change in product
price
END OF
PAGE
1
, ECON 202 FINAL - LATEST
OLE MISS HAYES
EXAM
Change in demand
a shift in the demand curve as a result of a change in an underlying
factor of demand
Determinants of Demand
price, income, tastes and preferences, prices of related goods, and
expectations
Change in quantity supplied
results from a change in product price
Change in supply
a shift in the supply curve as a result of an underlying factor of supply
What does increasing marginal cost of production (or in other
words, diminishing marginal returns) explain?
why the supply curve is upward sloping
Determinants of Supply
factors other than price that effect the quantity a seller is willing to
supply at a given price, including the number of sellers, technology,
input costs, government regulation, the price of other goods, and
producer expectations
What happens when determinants of supply are changed?
END OF
PAGE
2
, ECON 202 FINAL - LATEST
OLE MISS HAYES
EXAM
the entire supply curve will shift, either increasing or decreasing supply
at all price levels
What is equilibrium price and quantity determined by?
the intersection of demand and supply
(T/F) The demand curve is also the marginal benefit curve and the
marginal utility curve.
True
What happens when marginal benefits exceed the marginal costs of
producing a product?
allocative efficiency is not achieved in the market
What happens to equilibrium quantity when demand and supply
increase?
equilibrium quantity always increases
What happens to equilibrium price when demand and supply
increase?
if demand increases more than supply, price rises. if supply increases
more than demand, price falls. if they increase equally, price remains
unchanged
What happens to equilibrium quantity when demand and supply
decrease?
END OF
PAGE
3
