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Micro 1 and 2 test review

Page history last edited by roger_that 2 years, 2 months ago
  1. In pure capitalism, what determines the price of something?
  2. In pure capitalism, what determines what a business will produce?
  3. Why is “voluntary exchange” critical for pure capitalism?
  4. Using Coke, give an example of the Law of Demand.
  5. Sketch a BASIC demand curve showing Price, Quantity, and the D curve.
  6. How does “real income effect” help slant a demand curve in the “downward” direction.
  7. Using Twinkies, explain the Law of Diminishing Marginal Utility.
  8. What’s the difference between a “change in quantity demanded” and a “change in demand?”
  9. Draw a graph to illustrate the difference include a demand curve labeled D1, points marked A & B showing an increase in quantity demanded, points C & D showing a decrease in quantity demanded, a D2 curve showing an increase in demand, and a D3 curve showing a decrease in demand.
  10. For each, state whether it’d lead to [A] a change in quantity demanded or [B] a change in demand.
    • A movie star wears certain sunglasses & it suddenly becomes very cool to have a pair
    • Ethanol (“gas” made from corn) becomes widely available at the gas pump
    • The price of milk goes down
    • Half the people of Bradenton go back north in the Spring
    • Times suddenly go bad and many people lose their jobs
    • The price of beef suddenly skyrockets
  11. When a change in price doesn’t really change the demand, that product is said to be...
  12. When a change in price greatly affects the demand, that product is said to be...
  13. Draw a BASIC demand curve showing an elastic commodity.
  14. Draw a BASIC demand curve showing an inelastic commodity.
  15. For each, decide whether each product is [A] elastic or [B] inelastic?
    • Gasoline
    • Bread
    • Trip to Paris
    • Medication
    • T-Bone steak
    • Jewelry
  16. Using gas, offer an example of the Law of Supply.
  17. What’s the difference between a “change in quantity supplied” and a “change in supply?”
  18. Draw a graph to illustrate the difference; include a supply curve labeled S1, points marked A & B showing a decrease in quantity supplied, points C & D showing an increase in quantity supplied, an S2 curve showing a decrease in supply, and an S3 curve showing an increase in supply.
  19. For each, state whether it’d lead to [A] a change in quantity supplied or [B] a change in supply.
    • Supply of school lunches if Subway opens up a stand in the lunch cafeteria
    • Supply of canned soda if aluminum price skyrockets
    • Supply of laptops if laptop screens went dropped significantly
    • Supply of Ho-Hos if the price of Ho-Hos went up to $2 each
    • Supply of cars if a robot could make them all very quickly
    • Supply of cowboy hats if the price of them suddenly quadrupled
  20. Why does the graph of the Law of Diminishing Marginal Returns wind up like a hump?
  21. Draw a BASIC graph showing supply, demand, and the point of equilibrium.
  22. Draw a BASIC graph of Diminishing Marginal Returns using these data:
x-axis y-axis y-axis
Employees Output Margin
0 0 0
1 14 14
2 24 11
3 32 9
4 42 7
5 48 6
6 46    -2
7 41    -5

 

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