ECN 212 LATEST 2026 EXAM QUESTIONS AND
ANSWERS GRADED A+
✔✔marginal benefit - ✔✔the additional satisfaction that a person receives from
consuming an additional unit of good or service
✔✔law of demand - ✔✔-As the price of a good increases,
people will choose to buy less of it.
- As the price of a good decreases,
people will choose to buy more of it.
*price determines quantity demanded
change in quantity/change in price < 0
slopes downward on a graph
✔✔Normal Goods - ✔✔the goods for which an increase in income leads to a greater
consumption of the good in question
(most goods are this kind) (when you get more money you buy more of them)
✔✔Inferior Goods - ✔✔the good for which an increase in income leads to a lesser
consumption of the good in question
(these goods are rare) (when you get more money, you buy less of them)
✔✔substitutes - ✔✔goods that can replace one another in consumption
The price of one substitute and the shift in demand for the other move in the same
direction (positive or negative).
✔✔complements - ✔✔goods which are consumed together
The price of one complement and the shift in demand for the other move in the opposite
direction (positive or negative).
✔✔tastes and preferences - ✔✔when desire for a good increases, the demand for the
good shifts right
when desire for a good decreases, the demand for the good shifts left
✔✔consumer expectations of price - ✔✔If people expect the price of something to rise
in the future, their demand today will shift to the right
if they expect the price to fall, demand will shift to the
left)
✔✔consumer expectations of income - ✔✔if people expect their incomes to increase or
decrease in the future, they will act as if these changes have already occurred.
, ✔✔population and demography - ✔✔If your population or a certain portion of your
population increases, demand for goods related to these groups will shift to the right
(and if these populations decrease, demand will shift to the left).
✔✔derived demand - ✔✔If the demand for a good shifts, then inputs used to make that
good will also see a demand shift in the same direction (holding all else equal).
i.e.- if demand for leather couches increases, demand for leather will also increase
✔✔elasticity of demand - ✔✔The actual burden of a tax depends on the
elasticity of supply relative to demand. As supply becomes more inelastic, more of the
burden will fall on sellers and resource suppliers. As demand becomes more inelastic,
more of the burden will fall on buyers.
✔✔elastic demand - ✔✔a change in price leads to a relatively large change in quantity
demanded
this will happen when close substitutes for the good are readily available
✔✔unit elastic demand - ✔✔A type of price elasticity that assumes a move higher in
prices will cause a proportional decrease in demand
✔✔inelastic demand - ✔✔a change in price leads to only a small change in quantity
demanded
this will happen when close substitutes are not readily available
✔✔law of supply - ✔✔As the price of a good increases, the more firms will choose to
offer it at this price. Conversely, as the price of a good decreases, the less firms will
choose to offer it at this price.
change in quantity/change in price > 0
slopes upward
✔✔state of (production) technology - ✔✔As time goes on, we get better and better at
using the resources around us efficiently.
As that efficiency increases, we can make goods by using fewer resources. Fewer
resources mean a lower cost. This causes supply to shift rightward (or outward).
✔✔Prices of Inputs - ✔✔When you require resources to produce your product, you care
very much about the price of these resources. As the price of any input resource
increases, your willingness to supply the final good at any given price decreases. This is
a leftward (or inward) shift of the supply curve.
✔✔Producer Expectations - ✔✔If firms expect the price of something to rise in the
future, they will be less willing to supply the good today at any given price. Supply will
shift to the left (inward).
ANSWERS GRADED A+
✔✔marginal benefit - ✔✔the additional satisfaction that a person receives from
consuming an additional unit of good or service
✔✔law of demand - ✔✔-As the price of a good increases,
people will choose to buy less of it.
- As the price of a good decreases,
people will choose to buy more of it.
*price determines quantity demanded
change in quantity/change in price < 0
slopes downward on a graph
✔✔Normal Goods - ✔✔the goods for which an increase in income leads to a greater
consumption of the good in question
(most goods are this kind) (when you get more money you buy more of them)
✔✔Inferior Goods - ✔✔the good for which an increase in income leads to a lesser
consumption of the good in question
(these goods are rare) (when you get more money, you buy less of them)
✔✔substitutes - ✔✔goods that can replace one another in consumption
The price of one substitute and the shift in demand for the other move in the same
direction (positive or negative).
✔✔complements - ✔✔goods which are consumed together
The price of one complement and the shift in demand for the other move in the opposite
direction (positive or negative).
✔✔tastes and preferences - ✔✔when desire for a good increases, the demand for the
good shifts right
when desire for a good decreases, the demand for the good shifts left
✔✔consumer expectations of price - ✔✔If people expect the price of something to rise
in the future, their demand today will shift to the right
if they expect the price to fall, demand will shift to the
left)
✔✔consumer expectations of income - ✔✔if people expect their incomes to increase or
decrease in the future, they will act as if these changes have already occurred.
, ✔✔population and demography - ✔✔If your population or a certain portion of your
population increases, demand for goods related to these groups will shift to the right
(and if these populations decrease, demand will shift to the left).
✔✔derived demand - ✔✔If the demand for a good shifts, then inputs used to make that
good will also see a demand shift in the same direction (holding all else equal).
i.e.- if demand for leather couches increases, demand for leather will also increase
✔✔elasticity of demand - ✔✔The actual burden of a tax depends on the
elasticity of supply relative to demand. As supply becomes more inelastic, more of the
burden will fall on sellers and resource suppliers. As demand becomes more inelastic,
more of the burden will fall on buyers.
✔✔elastic demand - ✔✔a change in price leads to a relatively large change in quantity
demanded
this will happen when close substitutes for the good are readily available
✔✔unit elastic demand - ✔✔A type of price elasticity that assumes a move higher in
prices will cause a proportional decrease in demand
✔✔inelastic demand - ✔✔a change in price leads to only a small change in quantity
demanded
this will happen when close substitutes are not readily available
✔✔law of supply - ✔✔As the price of a good increases, the more firms will choose to
offer it at this price. Conversely, as the price of a good decreases, the less firms will
choose to offer it at this price.
change in quantity/change in price > 0
slopes upward
✔✔state of (production) technology - ✔✔As time goes on, we get better and better at
using the resources around us efficiently.
As that efficiency increases, we can make goods by using fewer resources. Fewer
resources mean a lower cost. This causes supply to shift rightward (or outward).
✔✔Prices of Inputs - ✔✔When you require resources to produce your product, you care
very much about the price of these resources. As the price of any input resource
increases, your willingness to supply the final good at any given price decreases. This is
a leftward (or inward) shift of the supply curve.
✔✔Producer Expectations - ✔✔If firms expect the price of something to rise in the
future, they will be less willing to supply the good today at any given price. Supply will
shift to the left (inward).
