Entire Class Study Guide Econ 110

Question 1

What are the 4 properties of how people behave

Answer 1

• people face trade offs
• opportunity costs
• marginal analysis
• people respond to incentives

Question 1

What are 2 ways people interact in markets

Answer 1

• gains from trade
• property rights

Question 2

What is the reason for the role of government and property rights in markets?

Answer 2

• reasons to intervene, market failures (not reaching equilibrium), and inequality

Question 3

Movement along the supply curve is caused by

Answer 3

a change in price

Question 4

What else can shift a Demand Curve?

Answer 4

Future price expectations and non price factors

Question 5

When market points are functioning under equilibrium, there is a

Answer 5

shortage

Question 6

shortages without price ceilings are

Answer 6

temporary

Question 7

If Supply shifts right and demand shifts left what happens to P and Q

Answer 7

Price goes down, equilibrium quantity stays the same

Question 8

What is elasticity of demand?

Answer 8

How much P&Q respond to an events

Question 9

Examples of Inelastic Goods

Answer 9

insulin, gasoline, utilities,

Question 10

Examples of Elastic Goods

Answer 10

coffee, mobile phones, automobiles

Question 11

Inelastic goods are affected more by

Answer 11

a change in price

Question 12

Elastic goods are affected more by what

Answer 12

a change in quantity

Question 13

a PED below 1 is

Answer 13

inelastic

Question 14

a PED above 1 is

Answer 14

elastic

Question 15

A PED at 1 is

Answer 15

unit elastic

Question 16

Total Surplus =

Answer 16

consumer surplus + producer surplus

Question 17

Which surplus is above the equilibrium price

Answer 17

consumer

Question 18

Which surplus is below the equilibrium price

Answer 18

producer

Question 19

If Supply decreases in an inelastic market, what happens to CS, PS, and TS

Answer 19

CS goes down, PS rises, and TS rises

Question 20

If Demand increases in an elastic market, what happens to CS, PS , and TS

Answer 20

CS is ambiguous, PS rises, and TS rises