Microeconomics Unit 2 Study Guide



Microeconomics Unit 2 Study Guide

1. Consumers are told that the consumption of broccoli will significantly reduce the risk of cancer. What will happen to the demand of broccoli?

2. At the market equilibrium clearing price, _____________ equals ________________.

3. If a demand curve shifts to the right, the demand has _____________________.

If a demand curve shifts to the left, the demand has ______________________.

4. Make sure you know how to interpret supply and demand graphs. This includes shifts, market equilibrium price changes, ceilings and floors, and shortages and surpluses. Look back at the practice we did in class.

5. List and define the three types of business organizations.

6. List and describe the four market structures.

7. Define unlimited liability. This is an advantage of which business structure?

8. Define horizontal merger. Provide an example.

9. Define vertical merger. Provide an example.

10.

In the graph, the equilibrium price is approximately?

In the graph above, list a price would cause a shortage?

In the graph above, list a price would cause a surplus?

10. The Law of Supply states that

11. If a product is sold at market equilibrium price the QD should equal _____.

12.

List three things that could cause the demand curve to move from D1 to D3. Remember price does not change demand. Price changes quantity demanded.

13. List three factors that might cause an increase in the supply of a product? Remember price does not change supply. Price changes quantity supplied.

14. What is elastic demand?

15. What is inelastic demand?

16. Define the Law of Demand.

17.

A movement from D1 to D2 would be a/an increase/decrease in____________________.

A movement from D2 to D1 would be a/an increase/decrease in ____________________.

A movement from x to y would be a/an increase/decrease in ______________________.

A movement from y to x would be a/an increase/decrease in ______________________.

18.

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What is the quantity demanded and supplied at $40? Would this cause a shortage, surplus, or equilibrium?

QD_________ QS____________ ________________________

What is the quantity demanded and supplied at $20? Would this cause a shortage, surplus, or equilibrium?

QD_________ QS____________ ________________________

What is the quantity demanded and supplied at $60? Would this cause a shortage, surplus, or equilibrium?

QD_________ QS____________ ________________________

19.

[pic]

A price of $.50 would cause a shortage/surplus of 160.

A price of $1.60 would cause a shortage/surplus of 160.

20.

[pic][pic]

Graph A depicts a/an increase/decrease in demand/supply.

Graph B depicts a/an increase/decrease in demand/supply.

Graph C depicts a/an increase/decrease in demand/supply.

Graph D depicts a/an increase/decrease in demand/supply.

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