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AP Macroeconomics and Microeconomics Mr. Sadow Chapters 3-6 Homework Page 1 of 2

Use the Chapters 3-6 presentation on our website, which is the same we use in class.

Pages 1-18 due by

1. Define supply (S).

2. Define demand (D).

3. Define supply (S) and demand (D) model.

4. Define market equilibrium (Me).

5. Define classical economics.

6. Explain the correlation between demand (D), price (P), and quantity demanded (Qd).

7. Define the law of demand. Using price (P) and quantity demanded (Qd), create a small graph showing how the law of demand works.

8. Define demand (D) curve. Draw a graph of one for a market. Include any numbers you want. Clearly label everything, including the

graph and the curve.

9. Why would a demand (D) curve shift to the right? Shift to the left? Draw a graph of each. Clearly label everything, including the

graphs and the curves.

10. Define and give an example of a normal good.

11. Define and give an example of an inferior good.

12. Define and give an example of a substitute good.

13. Define and give an example of a complementary good.

14. Draw a production possibilities curve/frontier indicating proportional and constant opportunity costs. Use cars on the vertical axis

and bikes on the horizontal. Label everything.

Pages 19-42 due by

1. Compare and contrast movement along vs. shifts of the demand curve. Draw two graphs, one showing a shift and one showing a

movement. Clearly label everything, including the graphs and the curves.

2. Explain the correlation between supply (S), price (P), and quantity supplied (Qd).

3. Define the law of supply.

4. Define supply (S) curve. Draw a graph of one. Include any numbers you want. Clearly label everything, including the graph and the

curve.

5. Why would a supply (S) curve shift to the right? Shift to the left? Draw a graph of each. Clearly label everything, including the

graphs and the curves.

6. Compare and contrast movement along vs. shifts of the supply curve. Draw two graphs, one showing a shift and one showing a

movement. Clearly label everything, including the graphs and the curves.

7. What is the double-shift rule? Draw a graph indicating a double-shift. Clearly label everything, including the graph and the curve.

Pages 43-54 due by

1. Define equilibrium price (Pe).

2. Define equilibrium quantity (Qe).

3. Define market equilibrium (Me). What happens to prices (P) when supply (S) decreases? When supply increases?

4. Draw two graphs of markets in equilibrium. Clearly label everything as you have done before, including the graph and curve.

5. Draw two graphs of markets in equilibrium. On the first graph, show the original Me and then a new Me after an increase in demand

(D). On the second graph, show the original Me and then a new Me after an decrease in demand. Label everything clearly.

6. Draw two graphs of markets in equilibrium. On the first graph, show the original Me and then a new Me after an increase in supply

(S). On the second graph, show the original Me and then a new Me after an decrease in supply. Label everything clearly.

7. Define price controls.

8. Explain Engel’s Law.

9. Define price ceiling. Give an example.

10. Define price floor. Give an example.

11. Define binding and list two other words that are used to refer to this.

12. Define and explain equilibrium wage (We).

13. Draw a production possibilities curve/frontier indicating non-proportional and increasing opportunity costs. Use books on the

vertical axis and dishes on the horizontal. Label everything.

14. Using our website, use the “Chapters 3-6 vocabulary Quizlet” link to review the words we have studied so far this chapter.

Pages 55-100 due by Page 2 of 3

1. Define binding and explain its relevance. Using a graph, show the impact of a binding ceiling or floor.

2. Define and explain elasticity. Give an example.

3. Define cross-price elasticity and explain its associated formula. Create an example using the formula with any numbers you choose.

4. If the cross-price elasticity of two goods is -.5, what are the two goods called?

5. If the cross-price elasticity of two goods is .5, what are the two goods called?

6. If the cross-price elasticity of two goods is 0, what are the two goods called?

7. Define price elasticity of demand (PED) and explain its associated formula. Create an example using the formula and any

numbers you choose.

8. Define price elasticity of supply (PES) and explain the associated formula. Create an example using the formula and any

numbers you choose.

9. Using our website, use the “Chapters 3-6 vocabulary Quizlet” link to review the words we have studied so far this chapter.

10. Review the pdf presentation for Chapter 2 on our website. A little studying now will go a long way later! Can only help!! (

Pages 101-122 due by

1. Define unit-free measure and explain its use. Why is there a benefit in using a unit-free measure?

2. Compare and contrast elastic/relatively elastic demand (D) and inelastic/relatively inelastic demand.

3. Define perfectly elastic demand (D). Graph it then give an example.

4. Define perfectly inelastic demand (D). Graph it then give an example.

5. If a good or service's price elasticity of demand (PED) is < 1, what are the terms that describe it?

6. If a good or service's price elasticity of demand (PED) = 0, what is the term that describes it?

7. If a good or service's price elasticity of demand (PED) is > than 1, what are the terms that describe it?

8. If a good or service's price elasticity of demand (PED) = 1, what is the term that describes it?

9. If a good or service's price elasticity of demand (PED) is infinity, what is the term that describes it?

10. Define revenue and explain its formula.

11. If a good or service's price elasticity of demand (PED) is > 1, what will an increase in price (P) do to a firm’s revenue?

12. If a good or service's price elasticity of demand (PED) is < 1, what will an increase in price (P) do to a firm’s revenue?

13. If a good or service's price elasticity of demand (PED) = 1, what will an increase in price (P) do to a firm’s revenue?

14. Draw a production possibilities curve/frontier indicating non-proportional and increasing opportunity costs. Use desks on the vertical

axis and chairs on the horizontal. Next, show an increase in chairs. Label everything.

15. Using our website, use the “Chapters 3-6 vocabulary Quizlet” link to review the words we have studied so far this chapter.

Pages 123-143 due by

1. Define income elasticity of demand (YED) and explain its associated formula. Create an example using the formula and any

numbers you choose.

2. If the income elasticity of demand is negative, what are the two goods called?

3. If the income elasticity of demand is positive, what are the two goods called?

4. Define utility. Create an example.

5. Define marginal utility. Create an example using any numbers you want.

6. Define total utility and how to calculate it. Create an example using any numbers you want.

7. Define budget constraint. Create an example by drawing a box.

8. Define utility maximization.

9. Define optimal combination.

10. Define income effect. Create an example using any numbers you want. Why does it only apply to normal goods?

11. Define substitution effect. Create an example using any numbers you want.

12. What typically happens to demand (D) when someone's income positively changes? Negatively? Create an example of both using

any numbers you want.

13. Using our website, use the “Chapters 3-6 vocabulary Quizlet” link to review the words we have studied so far this chapter.

Pages 144-158 due by

1. Define marginal benefit (MB). Create an example using any numbers you want.

2. Why do you think the marginal benefit (MB) decreases as more of an item is consumed?

3. Why might a consumer not buy an item if the price (P) is higher than the marginal benefit (MB)? Create an

example using any numbers you want.

4. What is the price equals marginal benefit rule (P = MB)?

5. Define market demand curve. Create an example by drawing a graph.

6. Define consumer surplus. Create an example using any numbers you want.

7. Define total consumer surplus and how to calculate it. Create an example using any numbers you want.

8. Draw a production possibilities curve/frontier indicating proportional and constant opportunity costs. Use stools on the vertical axis

and closets on the horizontal. Next, show an increase in stools. Label everything.

9. Using our website, use the “Chapters 3-6 vocabulary Quizlet” link to review the words we have studied so far this chapter.

10. Using our website, use the “Chapters 1-16 Microeconomics- the most important vocabulary Quizlet” link to review the most

important words from this chapter that appear in the free-response questions.

Pages 159-166 due by Page 3 of 3

1. Define production function.

2. Define firm. Give an example of one.

3. What is the difference between a sole proprietorship and a partnership? Give examples of each.

4. What is the difference between a fixed factor and a variable factor? Give examples of each.

5. Define price-taker.

6. Define competitive market. Give an example of a company involved in a competitive market?

7. Define perfect or pure competition market.

8. Define productive efficiency.

9. Define allocative efficiency.

10. Define monopoly. What company may be considered a monopoly today?

11. Using our website, use the “Chapters 3-6 vocabulary Quizlet” link to review the words we have studied so far this chapter.

12. Using our website, use the “Chapters 1-16 Microeconomics- the most important vocabulary Quizlet” link to review the most

important words from this chapter that appear in the free-response questions.

Pages 167-186 due by

1. Explain the formula for total revenue (TR). Create an example using the formula and any numbers you choose.

2. Explain the formula for profit. Create an example using the formula and any numbers you choose.

3. Define total costs (TC). How are profits, total revenue (TR), and total costs related?

4. Define marginal product of labor (MPL).

5. Define diminishing returns to labor. Create an example further explaining this.

6. Define fixed costs (FC). Give some examples of them.

7. Define variable costs (VC). Give some examples of them.

8. Define marginal cost (MC).

9. In a graph, why does the curve get steeper as the marginal cost (MC) increases?

10. Define and explain profit maximization.

11. Why do profits often first increase then decrease as more is produced in a firm?

12. Using our website, use the “Chapters 3-6 vocabulary Quizlet” link to review the words we have studied so far this chapter.

13. Using our website, use the “Chapters 1-16 Microeconomics- the most important vocabulary Quizlet” link to review the most

important words from this chapter that appear in the free-response questions.

Pages 187-205 due by

1. Define and explain marginal revenue product of labor (MRP).

2. Define and explain marginal revenue cost of labor (MRC).

3. Define and explain marginal revenue (MR).

4. What is the price equals marginal cost rule (P = MC)?

5. If marginal costs rise (MC) very sharply on account of more production, what would the supply (S) curve look like? What if the

marginal costs increased gradually overtime? Draw a graph of each using any numbers you want. Clearly label anything.

6. Define producer surplus (PS).

7. Define total producer surplus (PS).

8. What is the difference between profits and producer surplus?

9. Compare the formulas for producer surplus and total producer surplus. Create an example using each formula and any numbers you

want.

10. Using our website, use the “Chapters 3-6 vocabulary Quizlet” link to review the words we have studied so far this chapter.

11. Using our website, use the “Chapters 1-6 Microeconomics- essential graphs and formulas Quizlet” link to review the most

important graphs and formulas

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