MBA_Exit_Exam_Study_Guide
1. The demand and supply curves show the relationship market price level when
between the... the amount of a good that
is demanded holding all
other factors constant.
2. The degree to which quantity demanded 'reacts' to elasticity
price changes can be determined with the ____ of de-
manded.
3. The law of demand states that as prices rise, quantity falls
demanded ____ (and vice-versa).
4. Quantity supplied is _____(positively/negatively) asso- -positively
ciated with price increases, though the degree to
which quantity supplied can respond to price changes
depends on the elasticity of supply.
5. Goods that are easily made (low marginal cost) are more
_____(more/less) elastic than those that are not.
Ex: capacity constraints of a generator or factory, or
seats in a stadium
6. Goods that are easily made are ____(low/high) margin- -low
al cost.
7. What are 'comparative statistics?' - changes in equilibrium
price and quantity
8. T/F: If a 'determinant' of demand or supply changes, -true
then the entire price-quantity relationship changes.
9. Example of comparative statistics? - an increase in demands
that occurs because there
, has been a positive in-
come shock is expected
to increase the amount
bought of a good-even
holding prices constant.
10. What are the 5 important demand determinants? 1. Tastes and preferences
(ex: increase in demand
for organic products)
2. Income/wealth (ex:
fall in restaurant demand
during recessions)
- important differences for
normal goods and inferior
goods
3. Price of other related
goods (ex: change in de-
mand for taxi services af-
ter entrance of low-cost
ride-share options).
4. Exogenous shocks
(Ex: change in demand
for generators following
long-lasting power out-
age).
5. Future expectations (ex:
change in demand for toi-
let paper during COVID
crisis).
,11. What are the 3 primary important supply determi- 1. Input costs (increase
nants? in supply due to innova-
tion to cost-saving tech-
nology).
2.Government regulation
(ex: new taxes and subsi-
dies)
3. Price of other goods
you produce (ex: switch
in production to product
that can command higher
price in the market).
12. What results in comparative statistics? Resulting change in equi-
librium price and quantity
following a change to sup-
ply and/or demand.
13. What are comparative statistics used for? -used to compare two
'statistic' states of the
world- before and after
some innovation in sup-
ply/demand (ex: supply
shock).
14. T/F: price/quantity change is also impacted by the true
elasticity of supply and demand.
15. increase, but price will re-
main the same.
, If there is an increase in demand when supply is per-
fectly elastic, this will cause the equilibrium quantity
to ....
16. What guides economic behavior? -price movements guide
economic behavior-re-
duce surpluses and short-
ages
17. If a market is not equilibrium and there is no interven- 1. decrease (surplus)
tion preventing price movement, then price is expect-
ed to do what two things? 2. increase (shortage)
18. Market failures and market intervention impedes the - prices
___ from functioning as an efficient "coordinating"
mechanism.
19. Broadly elasticities measure the ______ of one variable - responsiveness
to a change in another variable.
20. Elasticities and total revenue: if demand is inelastic, -increase
then total revenue is expected to ___following a piece
increase (and vice versa).
21. Elasticities and total reveue: If demand is elastic, then -decrease
total revenue is expected to ___ following a price in-
crease (and vice versa).
22. The optimal price for a firm with market power can be inverse-elasticity rule
recovered using the Lerner Index or ____ rule.
23. T/F: Elasticities can be recovered from estimated de- True
mand functions
- ex:regression of quanti-
1. The demand and supply curves show the relationship market price level when
between the... the amount of a good that
is demanded holding all
other factors constant.
2. The degree to which quantity demanded 'reacts' to elasticity
price changes can be determined with the ____ of de-
manded.
3. The law of demand states that as prices rise, quantity falls
demanded ____ (and vice-versa).
4. Quantity supplied is _____(positively/negatively) asso- -positively
ciated with price increases, though the degree to
which quantity supplied can respond to price changes
depends on the elasticity of supply.
5. Goods that are easily made (low marginal cost) are more
_____(more/less) elastic than those that are not.
Ex: capacity constraints of a generator or factory, or
seats in a stadium
6. Goods that are easily made are ____(low/high) margin- -low
al cost.
7. What are 'comparative statistics?' - changes in equilibrium
price and quantity
8. T/F: If a 'determinant' of demand or supply changes, -true
then the entire price-quantity relationship changes.
9. Example of comparative statistics? - an increase in demands
that occurs because there
, has been a positive in-
come shock is expected
to increase the amount
bought of a good-even
holding prices constant.
10. What are the 5 important demand determinants? 1. Tastes and preferences
(ex: increase in demand
for organic products)
2. Income/wealth (ex:
fall in restaurant demand
during recessions)
- important differences for
normal goods and inferior
goods
3. Price of other related
goods (ex: change in de-
mand for taxi services af-
ter entrance of low-cost
ride-share options).
4. Exogenous shocks
(Ex: change in demand
for generators following
long-lasting power out-
age).
5. Future expectations (ex:
change in demand for toi-
let paper during COVID
crisis).
,11. What are the 3 primary important supply determi- 1. Input costs (increase
nants? in supply due to innova-
tion to cost-saving tech-
nology).
2.Government regulation
(ex: new taxes and subsi-
dies)
3. Price of other goods
you produce (ex: switch
in production to product
that can command higher
price in the market).
12. What results in comparative statistics? Resulting change in equi-
librium price and quantity
following a change to sup-
ply and/or demand.
13. What are comparative statistics used for? -used to compare two
'statistic' states of the
world- before and after
some innovation in sup-
ply/demand (ex: supply
shock).
14. T/F: price/quantity change is also impacted by the true
elasticity of supply and demand.
15. increase, but price will re-
main the same.
, If there is an increase in demand when supply is per-
fectly elastic, this will cause the equilibrium quantity
to ....
16. What guides economic behavior? -price movements guide
economic behavior-re-
duce surpluses and short-
ages
17. If a market is not equilibrium and there is no interven- 1. decrease (surplus)
tion preventing price movement, then price is expect-
ed to do what two things? 2. increase (shortage)
18. Market failures and market intervention impedes the - prices
___ from functioning as an efficient "coordinating"
mechanism.
19. Broadly elasticities measure the ______ of one variable - responsiveness
to a change in another variable.
20. Elasticities and total revenue: if demand is inelastic, -increase
then total revenue is expected to ___following a piece
increase (and vice versa).
21. Elasticities and total reveue: If demand is elastic, then -decrease
total revenue is expected to ___ following a price in-
crease (and vice versa).
22. The optimal price for a firm with market power can be inverse-elasticity rule
recovered using the Lerner Index or ____ rule.
23. T/F: Elasticities can be recovered from estimated de- True
mand functions
- ex:regression of quanti-
