ECON 202 FINAL EXAM UPDATED ALL QUESTIONS
AND ANSWERS SURE A+
(✔✔A Change in Demand - ✔✔This means a shift of the ENTIRE demand curve.
Caused by any change in a determinant EXCEPT price which only changes quantity
demanded.
✔✔A Change in The Quantity Demanded - ✔✔This means a shift along the demand
curve. A change in the quantity demanded is caused by a change in price.
✔✔Price Controls - ✔✔government-mandated minimum or maximum prices that may be
charged for goods and services. Designed to keep prices down. Price floors (no lower
than) and price ceilings (no higher than).
✔✔Market Equilibrium - ✔✔a situation in which quantity demanded equals quantity
supplied
✔✔The Law of Supply - ✔✔All other things being equal, as the price rises for a good,
the quantity supplied generally rises; as the price falls for a good, the quantity supplied
also falls.
✔✔Price vs. Quantity Supplied Direct Relationship - ✔✔Caused by seller's desire to
maximize profits. Price goes up, quantity supplied goes up. Price goes down, quantity
supplied goes down.
✔✔Other Factors Affecting Supply - ✔✔Prices of Inputs (PI^, QSv), Technology (T gets
better, QS goes up), Price Expectations (prices expected to rise, QS goes down)
✔✔Change in Supply vs. a Change in the Quantity Supplied - ✔✔Change in supply
means shift of whole curve, Change in the Quantity Supplied means shift along the
curve
✔✔Surpluses - ✔✔An amount produced in excess of what is needed.
, ✔✔Shortages - ✔✔situation in which quantity demanded is GREATER than quantity
supplied at a price BELOW the equilibrium pt.
✔✔Black Markets - ✔✔goods are exchanged illegally at prices which are higher than
officially established prices
✔✔Economic Questions - ✔✔What are you producing? How are you producing it? For
who is it being produced?
✔✔The Invisible Hand - ✔✔Theory developed by Adam Smith that refers to the way in
which the individual pursuit of self-interest can lead to good results for society as a
whole
✔✔Capitalism - ✔✔economic system in which private citizens own and use the factors
of production in order to generate profits
✔✔Socialism - ✔✔A system in which society, usually in the form of the government,
owns and controls the means of production.
✔✔A Mixed Economy - ✔✔A mixture of economies used in one nation.
✔✔Consumer Surplus - ✔✔the difference between the highest price a consumer is
willing to pay and the price the consumer actually pays
✔✔Consumer Surplus and the Demand Curve - ✔✔The area between the price you are
willing to pay on the demand curve and the point you actually pay on the demand curve.
✔✔Producer Surplus - ✔✔the difference between the lowest price a firm would be
willing to accept and the price it actually receives
✔✔Producer Surplus and the Supply Curve - ✔✔Total producer surplus can reasonably
be measured as the area between the supply curve and the horizontal line drawn at the
equilibrium market price.
✔✔Cost and Producer Surplus - ✔✔Difference between cost and the amount received
✔✔How changing prices affect consumer surplus - ✔✔When prices are lower than
consumers are willing to pay they gain consumer surplus. The lower the price goes the
more consumer surplus.
✔✔Price Elastic - ✔✔means that the demand for a product is sensitive to changes in
price. (P^, TRv) (Pv, TR^) There are many substitutes. Ep>1
AND ANSWERS SURE A+
(✔✔A Change in Demand - ✔✔This means a shift of the ENTIRE demand curve.
Caused by any change in a determinant EXCEPT price which only changes quantity
demanded.
✔✔A Change in The Quantity Demanded - ✔✔This means a shift along the demand
curve. A change in the quantity demanded is caused by a change in price.
✔✔Price Controls - ✔✔government-mandated minimum or maximum prices that may be
charged for goods and services. Designed to keep prices down. Price floors (no lower
than) and price ceilings (no higher than).
✔✔Market Equilibrium - ✔✔a situation in which quantity demanded equals quantity
supplied
✔✔The Law of Supply - ✔✔All other things being equal, as the price rises for a good,
the quantity supplied generally rises; as the price falls for a good, the quantity supplied
also falls.
✔✔Price vs. Quantity Supplied Direct Relationship - ✔✔Caused by seller's desire to
maximize profits. Price goes up, quantity supplied goes up. Price goes down, quantity
supplied goes down.
✔✔Other Factors Affecting Supply - ✔✔Prices of Inputs (PI^, QSv), Technology (T gets
better, QS goes up), Price Expectations (prices expected to rise, QS goes down)
✔✔Change in Supply vs. a Change in the Quantity Supplied - ✔✔Change in supply
means shift of whole curve, Change in the Quantity Supplied means shift along the
curve
✔✔Surpluses - ✔✔An amount produced in excess of what is needed.
, ✔✔Shortages - ✔✔situation in which quantity demanded is GREATER than quantity
supplied at a price BELOW the equilibrium pt.
✔✔Black Markets - ✔✔goods are exchanged illegally at prices which are higher than
officially established prices
✔✔Economic Questions - ✔✔What are you producing? How are you producing it? For
who is it being produced?
✔✔The Invisible Hand - ✔✔Theory developed by Adam Smith that refers to the way in
which the individual pursuit of self-interest can lead to good results for society as a
whole
✔✔Capitalism - ✔✔economic system in which private citizens own and use the factors
of production in order to generate profits
✔✔Socialism - ✔✔A system in which society, usually in the form of the government,
owns and controls the means of production.
✔✔A Mixed Economy - ✔✔A mixture of economies used in one nation.
✔✔Consumer Surplus - ✔✔the difference between the highest price a consumer is
willing to pay and the price the consumer actually pays
✔✔Consumer Surplus and the Demand Curve - ✔✔The area between the price you are
willing to pay on the demand curve and the point you actually pay on the demand curve.
✔✔Producer Surplus - ✔✔the difference between the lowest price a firm would be
willing to accept and the price it actually receives
✔✔Producer Surplus and the Supply Curve - ✔✔Total producer surplus can reasonably
be measured as the area between the supply curve and the horizontal line drawn at the
equilibrium market price.
✔✔Cost and Producer Surplus - ✔✔Difference between cost and the amount received
✔✔How changing prices affect consumer surplus - ✔✔When prices are lower than
consumers are willing to pay they gain consumer surplus. The lower the price goes the
more consumer surplus.
✔✔Price Elastic - ✔✔means that the demand for a product is sensitive to changes in
price. (P^, TRv) (Pv, TR^) There are many substitutes. Ep>1
