Econ 10A Study Set with Questions and Answers

Econ 10A Study Set with Questions and Answers Model ANSWER Simplified representation of reality exogenous variable ANSWER Price is determined by factors not discussed in the particular model endogenous variable ANSWER a variable that is determined within the model optimization principle ANSWER People try to choose the best patterns of consumption that they can afford Equilibrium principle ANSWER prices adjust until the amount that people demand of something is equal to the amount that is supplied (Ie: equilibrium price) reservation price ANSWER The maximum price a given person will accept and still purchase the good demand curve ANSWER Relates the quantity demanded to price (quantity demanded at any given price) slopes down (-) competitive market ANSWER a market in which there are many buyers and many sellers so that each has a negligible impact on the market price. Each will (rent/sell) for the highest price the market will bear. All (sellers) operate independently equilibrium price ANSWER Each consumer who is willing to pay at least p* is able to buy a good