MICROECONOMICS exam 1-Questions and Answers Graded A+

MICROECONOMICS exam 1-Questions and Answers Graded A+ in order to have DEMAND consumers need to have the.. - ANSWER-ABILITY to buy WILLINGNESS to buy law of demand - ANSWER-Cereris Paribus (other things remain the same), as price goes DOWN, MORE quantities are demanded 6 Determinants of DEMAND SHIFTS ARE CAUSED BY... (know 4 & explain) - ANSWER-1. NUMBER of buyers (population changes) 2. INCOME of buyers -normal goods v. inferior goods -as income increases the demand for normal goods INCREASES; as income increases, the demand for inferior goods DECREASES. 3. TASTE/PREFERENCES of consumers; people want different things which can increase/decrease demand- if they really want something it will increase 4. EXPECTATIONS; when consumers expect price changes of certain goods; expect price to increase, demand will go UP before the spike (get it quick!) 5. RELATED goods: substitutes/complementary goods 6. TAXES demand curve - ANSWER-aka: DEMAND NEGATIVE (indirect/inverse) relationship= price goes UP, quantity goes DOWN displays relationship of only ONE product/good each point = QUANTITY DEMANDED - depends on price ONLY. normal good - ANSWER-a good or service whose consumption increases when income increases and falls when income decreases (its price doesn't change) inferior good - ANSWER-a good or service whose consumption declines as income rises (its price doesn't change) substitute good - ANSWER-products or services that can be used in place of each other. when the price of one falls, the demand for the other product falls; when the price of one product rises, the demand for the other product rises complementary good - ANSWER-products and services that are used together. when the price of one falls, the demand for the other increases (and conversely) DEMAND; shift to the left= - ANSWER-DECREASE DEMAND; shift to the right= - ANSWER-INCREASE in order to SUPPLY businesses need to have the.. - ANSWER-ABILITY to supply WILLINGNESS to supply law of supply - ANSWER-Cereris Paribus (other things remain the same) as prices go DOWN(UP), LESS(MORE) quantities are supplied