ECON 100 MIDTERM QUESTIONS AND
CORRECT ANSWERS
Competitive market ✅✅CORRECT ANSW-a market in which there are many buyers and many
sellers so that each has a negligible impact on the market price
- goods and services being sold are very similar in nature. Ex: orange market
- A lot of buyers and sellers. Hundreds of thousands who are selling. Millions of people who buy. Ex:
clothes
Perfectly competitive market ✅✅CORRECT ANSW-A market that meets the conditions of (1) many
buyers and sellers, (2) all firms selling identical products, and (3) no barriers to new firms entering
the market.
- buyers and sellers are price takers
price taker ✅✅CORRECT ANSW-at the market price, buyers can buy all they want and sellers can
sell all they want.
Monopolies ✅✅CORRECT ANSW-one seller
ex: PG&E
Oligopoly ✅✅CORRECT ANSW-A market structure in which a few large firms dominate a market
EX: TELECOM; verizon, sprint, at&T
Monopolistic competition ✅✅CORRECT ANSW-Many buyers & sellers, but the products are not
exactly the same. Slight variations.
Ex. Toothpaste; colgate, crest, etc. Within those, there are different types of toothpaste (whitening,
total, max fresh, etc.)
Supply and Demand ✅✅CORRECT ANSW-Refers to the behavior of people as they interact with
one another in competitive markets.
, Markets ✅✅CORRECT ANSW-a group of buyers and sellers of a particular good or service
Buyers ✅✅CORRECT ANSW-determine the demand for the product
sellers ✅✅CORRECT ANSW-determine the supply of the product
Demand ✅✅CORRECT ANSW-refers to the willingness and ability of buyers to purchase a good or
service. Willing and able!
quantity demanded ✅✅CORRECT ANSW-of any good is the amount of a good that buyers are
willing and able to purchase
Law of demand ✅✅CORRECT ANSW-states that, all other things being equal, when the price of a
good rises ↑, the quantity demanded of the good falls ↓. Also, when the price falls ↓, the quantity
demanded rises ↑.
price rises, quantity demanded falls
price falls, quantity demanded rises
INVERSE
Market Demand ✅✅CORRECT ANSW-the sum of all individual demands for a particular good or
service
This is done by summing individual curves horizontally.
What causes the demand curve to shift? ✅✅CORRECT ANSW--Changes in the price of related
goods (substitutes; complements)
-Change in income (normal goods; inferior goods)
-Changes in tastes
-Changes in expectations
- number of buyers
CORRECT ANSWERS
Competitive market ✅✅CORRECT ANSW-a market in which there are many buyers and many
sellers so that each has a negligible impact on the market price
- goods and services being sold are very similar in nature. Ex: orange market
- A lot of buyers and sellers. Hundreds of thousands who are selling. Millions of people who buy. Ex:
clothes
Perfectly competitive market ✅✅CORRECT ANSW-A market that meets the conditions of (1) many
buyers and sellers, (2) all firms selling identical products, and (3) no barriers to new firms entering
the market.
- buyers and sellers are price takers
price taker ✅✅CORRECT ANSW-at the market price, buyers can buy all they want and sellers can
sell all they want.
Monopolies ✅✅CORRECT ANSW-one seller
ex: PG&E
Oligopoly ✅✅CORRECT ANSW-A market structure in which a few large firms dominate a market
EX: TELECOM; verizon, sprint, at&T
Monopolistic competition ✅✅CORRECT ANSW-Many buyers & sellers, but the products are not
exactly the same. Slight variations.
Ex. Toothpaste; colgate, crest, etc. Within those, there are different types of toothpaste (whitening,
total, max fresh, etc.)
Supply and Demand ✅✅CORRECT ANSW-Refers to the behavior of people as they interact with
one another in competitive markets.
, Markets ✅✅CORRECT ANSW-a group of buyers and sellers of a particular good or service
Buyers ✅✅CORRECT ANSW-determine the demand for the product
sellers ✅✅CORRECT ANSW-determine the supply of the product
Demand ✅✅CORRECT ANSW-refers to the willingness and ability of buyers to purchase a good or
service. Willing and able!
quantity demanded ✅✅CORRECT ANSW-of any good is the amount of a good that buyers are
willing and able to purchase
Law of demand ✅✅CORRECT ANSW-states that, all other things being equal, when the price of a
good rises ↑, the quantity demanded of the good falls ↓. Also, when the price falls ↓, the quantity
demanded rises ↑.
price rises, quantity demanded falls
price falls, quantity demanded rises
INVERSE
Market Demand ✅✅CORRECT ANSW-the sum of all individual demands for a particular good or
service
This is done by summing individual curves horizontally.
What causes the demand curve to shift? ✅✅CORRECT ANSW--Changes in the price of related
goods (substitutes; complements)
-Change in income (normal goods; inferior goods)
-Changes in tastes
-Changes in expectations
- number of buyers
