ECO 320 EXAM 1 REVIEW UPDATED
ACTUAL Exam Questions and CORRECT
Answers
Demand - CORRECT ANSWER Willingness to pay (marginal benefit)
Supply - CORRECT ANSWER Willingess to sell (marginal cost)
Demand shifters - CORRECT ANSWER Price of related goods (complements / substitutes),
income (normal goods / inferior goods), number of consumers, tastes, expectations
Supply shifters - CORRECT ANSWER Price of related goods in production, input prices,
number of suppliers, technology, expectations
Normal goods - CORRECT ANSWER as income increases, demand increases
Inferior goods - CORRECT ANSWER as income increases, demand decreases
Problem of price ceiling - CORRECT ANSWER creates shortage, inefficient allocation of the
good, creates black markets
If we expect shortages - CORRECT ANSWER form lines, lottery
Arbitrage - CORRECT ANSWER buying in one market (low) selling in another market (high)
Competitive market "perfect" - CORRECT ANSWER lots of buyers and sellers, identical
products, easy entrance and exit of market
ACTUAL Exam Questions and CORRECT
Answers
Demand - CORRECT ANSWER Willingness to pay (marginal benefit)
Supply - CORRECT ANSWER Willingess to sell (marginal cost)
Demand shifters - CORRECT ANSWER Price of related goods (complements / substitutes),
income (normal goods / inferior goods), number of consumers, tastes, expectations
Supply shifters - CORRECT ANSWER Price of related goods in production, input prices,
number of suppliers, technology, expectations
Normal goods - CORRECT ANSWER as income increases, demand increases
Inferior goods - CORRECT ANSWER as income increases, demand decreases
Problem of price ceiling - CORRECT ANSWER creates shortage, inefficient allocation of the
good, creates black markets
If we expect shortages - CORRECT ANSWER form lines, lottery
Arbitrage - CORRECT ANSWER buying in one market (low) selling in another market (high)
Competitive market "perfect" - CORRECT ANSWER lots of buyers and sellers, identical
products, easy entrance and exit of market
