micro

Question 1

determinants of demand

Answer 1

Buyers (# of)
Income of consumers
Tastes and preferences
Expectations
Related goods (compliment and substitutes)

Question 2

normal goods + examples

Answer 2

demand increases as consumer income increases
- steak
- gucci shoes
- leather sofa

Question 3

inferior goods + examples

Answer 3

demand decreases as consumer income rises (vise versa too)
- coke
- take out pizza
- pork bones
- potatoes

Question 4

determinants of supply

Answer 4

Subsidies and taxes
Technology
Other goods
Number of firms
Expectations
Resource costs
Shocks

Question 5

price mechanism

Answer 5

• has three functions (signaling, incentivizing, rationing)
• puts market at equilibrium, allocates scarce resources