Microeconomics Unit 2 Summary Key
Concepts
Law of demand - answersConsumer Price goes goes up = Buy Less
Consumer Price goes down - Buy More
Why does the Law of Demand occur? - answersThe income effect
The substitution effect
The law of diminishing marginal utility
The substitution effect - answerswhen consumers react to an increase in a good's price
by consuming less of that good and more of other goods
The income effect - answersthe change in consumption resulting from a change in real
income
The law of diminishing marginal utility - answersYou get less and less additional
satisfaction from each unit you consume
Shift in Supply & Demand - answersIncrease shifts right
Decrease shifts left
Changes in price doesn't shift the curve - answersIt moves along the curve
Substitutes - answersPRICE of A goes UP = DEMAND for B goes UP
PRICE of A goes DOWN = DEMAND of B goes DOWN
(Match)
Complements - answersPRICE of A goes UP = DEMAND for B goes DOWN
Concepts
Law of demand - answersConsumer Price goes goes up = Buy Less
Consumer Price goes down - Buy More
Why does the Law of Demand occur? - answersThe income effect
The substitution effect
The law of diminishing marginal utility
The substitution effect - answerswhen consumers react to an increase in a good's price
by consuming less of that good and more of other goods
The income effect - answersthe change in consumption resulting from a change in real
income
The law of diminishing marginal utility - answersYou get less and less additional
satisfaction from each unit you consume
Shift in Supply & Demand - answersIncrease shifts right
Decrease shifts left
Changes in price doesn't shift the curve - answersIt moves along the curve
Substitutes - answersPRICE of A goes UP = DEMAND for B goes UP
PRICE of A goes DOWN = DEMAND of B goes DOWN
(Match)
Complements - answersPRICE of A goes UP = DEMAND for B goes DOWN
