ECON 201 EXAM 1: (West Virginia University) Opportunity cost, PPF, Consumer/producer surplus, taxing, market equilibrium: Latest Updated

How a country can gain from specialization and trade (Ans- Specialize in producing that for which it has a comparative advantage and then trade for other needed goods and services. Causes Shift in Demand Curve (Ans- Changes in income, the prices of related goods, tastes, population and demographics, and expected future prices. Normal Good (Ans- A good for which the demand increases as income rises and decreases as income falls. Inferior Good (Ans- A good for which the demand increases as income falls and decreases as income rises. Substitutes (Substitute Goods) (Ans- Goods & services that can be used for the same purpose.Complements (Complementary Goods) (Ans- Goods that are used together. Distinction between normal and an inferior good (Ans- When income increases, demand for a normal good increase while demand for an inferior good fall. Perfectly Competitive Market (Ans- The model of demand and supply assumes that we are analyzing a (TERM). Perfectly Competitive Market (Ans- There are many buyers and sellers, all firms sell identical products, there are no barriers to entry. Quantity Demanded (Ans- The amount of a good or service that a consumer is willing and able to purchase at a given price.Demand Curve (Ans- A curve that shows the relationship between the price of a product and the quantity demanded of the product