ECON 102 COMPREHENSIVE EXAM
QUESTIONS AND ANSWERS PACK
2026
▶ How do natural effects determine supply?. Answer: - Weather, climate,
natural disasters etc. will affect what can be produced. Ex) A storm in
Florida ruins citrus fruit groves thus the supply of oranges will decrease.
▶ How do number of sellers in the market determine supply?. Answer:
Quantity of sellers will affect how many products will be in the market. Ex)
There is a large supply of fast food chains in the Denver Area compared to
the number of suppliers in Geneseo, (In the middle of nowhere) Illinois.
▶ How do changes in expectations determine supply?. Answer: - Supplier
expectations in terms of market forecasts or expected changes in laws may
affect the supply of goods. Ex) If you know that the government is going to
outlaw Brownies starting in December, you will try to supply as much as
you can right now and not in December.
▶ How do changes in the prices of related goods determine supply?.
Answer: - Goods that may be complementary to another good will affect the
supply of the original good ie. Hot dogs and hot dog buns (complementary),
ice cream and cones (complementary) and even soccer balls and footballs
(substitutes). Ex) If a hotdog company goes out of business, a hotdog bun
supplier may decrease their supply of buns.
▶ Do investments determine supply?. Answer: sometimes...*Investments-
Investments may change how much is being supplied into the economy
dependent upon how much is being invested.
▶ Why do prices Changes?. Answer: 1. Government action
2. Shift in supply or demand
▶ Equilibrium(E) or Market Clearing Price (MCP). Answer: No shortages,
no surpluses, Qd=Qs, Point in which S/D intersect and P=Qd,Qs.
, ▶ Price vs cost. Answer: Price is what the buyer and seller agree upon,
cost is all the factors that go into production ie. time, energy, resources,
etc.
▶ Example of surplus. Answer: minimum wage
▶ example of shortage. Answer: rent control
▶ Effect of a price floor. Answer: surplus
▶ effect of a price ceiling. Answer: shortage
▶ what causes a shortage?. Answer: quantity supplied is less than
quantity demanded
▶ what causes a surplus. Answer: quantity supplied is more than quantity
demanded
▶ price elasticity of demand. Answer: Demand is fixed on Q no matter
what happens to price (Inelastic) or Demand is subject to shift according to
P (Elastic)
Remember
E on graph= elastic
I on graph= inelastic
▶ Price inelastic supply. Answer: Supply is fixed on Q no matter what
happens to price (Inelastic) or Supply is subject to shift according to P
(Elastic).
▶ Veblen Good. Answer: Luxury Status Symbol good- As P increases so
does D. ie. Picasso Paintings, Phantom Rolls Royce, Heart of the Sea
diamond.
▶ Giffen Good. Answer: Poverty in comparison good- As P increase so
does D but now only in relation to other goods. Ex) As the price of all
groceries increase you may buy more bread rather than meat b/c what you
get back for the same amount spent on bread will last longer than what you
would have spent on meat.
QUESTIONS AND ANSWERS PACK
2026
▶ How do natural effects determine supply?. Answer: - Weather, climate,
natural disasters etc. will affect what can be produced. Ex) A storm in
Florida ruins citrus fruit groves thus the supply of oranges will decrease.
▶ How do number of sellers in the market determine supply?. Answer:
Quantity of sellers will affect how many products will be in the market. Ex)
There is a large supply of fast food chains in the Denver Area compared to
the number of suppliers in Geneseo, (In the middle of nowhere) Illinois.
▶ How do changes in expectations determine supply?. Answer: - Supplier
expectations in terms of market forecasts or expected changes in laws may
affect the supply of goods. Ex) If you know that the government is going to
outlaw Brownies starting in December, you will try to supply as much as
you can right now and not in December.
▶ How do changes in the prices of related goods determine supply?.
Answer: - Goods that may be complementary to another good will affect the
supply of the original good ie. Hot dogs and hot dog buns (complementary),
ice cream and cones (complementary) and even soccer balls and footballs
(substitutes). Ex) If a hotdog company goes out of business, a hotdog bun
supplier may decrease their supply of buns.
▶ Do investments determine supply?. Answer: sometimes...*Investments-
Investments may change how much is being supplied into the economy
dependent upon how much is being invested.
▶ Why do prices Changes?. Answer: 1. Government action
2. Shift in supply or demand
▶ Equilibrium(E) or Market Clearing Price (MCP). Answer: No shortages,
no surpluses, Qd=Qs, Point in which S/D intersect and P=Qd,Qs.
, ▶ Price vs cost. Answer: Price is what the buyer and seller agree upon,
cost is all the factors that go into production ie. time, energy, resources,
etc.
▶ Example of surplus. Answer: minimum wage
▶ example of shortage. Answer: rent control
▶ Effect of a price floor. Answer: surplus
▶ effect of a price ceiling. Answer: shortage
▶ what causes a shortage?. Answer: quantity supplied is less than
quantity demanded
▶ what causes a surplus. Answer: quantity supplied is more than quantity
demanded
▶ price elasticity of demand. Answer: Demand is fixed on Q no matter
what happens to price (Inelastic) or Demand is subject to shift according to
P (Elastic)
Remember
E on graph= elastic
I on graph= inelastic
▶ Price inelastic supply. Answer: Supply is fixed on Q no matter what
happens to price (Inelastic) or Supply is subject to shift according to P
(Elastic).
▶ Veblen Good. Answer: Luxury Status Symbol good- As P increases so
does D. ie. Picasso Paintings, Phantom Rolls Royce, Heart of the Sea
diamond.
▶ Giffen Good. Answer: Poverty in comparison good- As P increase so
does D but now only in relation to other goods. Ex) As the price of all
groceries increase you may buy more bread rather than meat b/c what you
get back for the same amount spent on bread will last longer than what you
would have spent on meat.
