Topic 2: Markets and Trade

Question 1

the combination of price and quantity such that there is neither excess demand (shortage) nor excess supply (surplus): no pressure
for the price to rise from consumers currently unable to buy or for the price
to fall from producers that are willing to sell at lower prices.

Answer 1

Equilibrium

Question 2

Buyer
preferences/tastes, income, price of related goods, expectations, number of
consumers.

Answer 2

Demand factors

Question 3

Technology, input prices, taxes, expectations, number of producers.

Answer 3

Supply factors

Question 4

price
elasticity of demand

Answer 4

the percentage change in the quantity demanded in
response to a percentage change in the price of a good.

Question 5

price
elasticity of demand equation

ep = Q / P = (Q2-Q1) / Q1 / (P2-P1) / P1

Answer 5

ep = Q / P = (Q2-Q1) / Q1 / (P2-P1) / P1

Question 6

Marginal cost equation

Answer 6

MC = ∆Production Cost / ∆Output