Chapter 3

Question 1

Demand schedule

Answer 1

Price        Quantity 
   1                   A
   2                   B
   3                   C
   4
   5
   6

Question 2

3 things that determine the elasticity

Answer 2

of substitutes

Definition of the good

Time

Question 3

Change in price

Answer 3

Change in quantity demand

Question 4

Change in anything else and curve shift

Answer 4

Change in demand

Question 5

Line straight up and down means

Answer 5

Inelastic

Question 6

Line horizontal

Answer 6

The more elastic

Question 7

Consumer surplus

Answer 7

Area below the demand curve, above the price line, up to the # of units consumed

 B*H/2 

The difference b/w what a consumer was willing to pay and what they did pay. It is happiness received for which they did not pay

Question 8

Determinants of demand

Answer 8

Determine the location of the demand curve
Shift the demand curve
Are the they ceteris paribus

Question 9

Suppliers do three things

Answer 9

Inputs-production-output

Question 10

Producer surplus

Answer 10

Amount producer is paid beyond what was necessary to get him to produce the good

Question 11

Invisible hand

Answer 11

Billions of people all following their own self interest leads to the optimal social outcome where producers produce the exact amount of the good the consumer wants

Question 12

The greater the amount of time to search for subs, the more elastic the curve

Answer 12

Second law of demand

Question 13

Spontaneous order

Answer 13

The decisions of billions of self interested people leads to order in society