econ final elzenga section 8 Flashcards
The law of demand says that the lower the price of a good, other things constant,
the lower the real income of consumers and the lower the quantity demanded of that good.
Which of the following statements about demand is true?
a. If most college students want a Mercedes sports coupe, their demand for it is high.
b. If price increases, the demand curve shifts to the right.
c. The demand curve for bacon won’t shift when the price of bacon changes.
d. If the supply curve shifts, thereby changing the price, the demand curve will shift as well. e. If the demand curve shifts, the supply curve will shift as well, whether or not the price changes.
The demand curve for bacon won’t shift when the price of bacon changes
An increase in demand for a good could mean that
a. consumers are willing to pay a higher price for each quantity of the good.
b. consumers are willing to buy larger quantities of the good at each price.
c. the demand curve has made a parallel shift to the right.
d. the demand curve has made a nonparallel shift to the right.
e. All of the above
e. All of the above
The difference between normal and inferior goods is that
an increase in income will shift the demand curve for a normal good rightward and the demand curve for an inferior good leftward.
Adam Smith
father of economics, invisible hand
Econ as a science
positive science (what is)
Every economy must ask
What goods to produce, How many goods will be produced, How to produce them, Who are they produced for
Why must an economy ask these essential questions?
scarcity
Econ is the science of…
choice
Traditional system
an economic system based on past ways of life and culture
Central planning
Government decides what/how/for whom goods are produced
English auction
ascending price, last bidder wins
Dutch auction
descending price, first bidder wins
First price auction
highest bidder wins
Second price auction
highest bidder wins, but pays the second highest bid
