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ECO 320 EXAM 1 REVIEW Questions with
Answers
Demand
Ans: Willingness to pay (marginal benefit)
Supply
Ans: Willingess to sell (marginal cost)
Demand shifters
Ans: Price of related goods (complements / substitutes), income (normal goods / inferior
goods), number of consumers, tastes, expectations
Supply shifters
Ans: Price of related goods in production, input prices, number of suppliers, technology,
expectations
Normal goods
Ans: as income increases, demand increases
Inferior goods
Ans: as income increases, demand decreases
Problem of price ceiling
Ans: creates shortage, inefficient allocation of the good, creates black markets
If we expect shortages
Ans: form lines, lottery
Arbitrage
Ans: buying in one market (low) selling in another market (high)
Competitive market "perfect"
Ans: lots of buyers and sellers, identical products, easy entrance and exit of market
Monopoly
Q&A
ECO 320 EXAM 1 REVIEW Questions with
Answers
Demand
Ans: Willingness to pay (marginal benefit)
Supply
Ans: Willingess to sell (marginal cost)
Demand shifters
Ans: Price of related goods (complements / substitutes), income (normal goods / inferior
goods), number of consumers, tastes, expectations
Supply shifters
Ans: Price of related goods in production, input prices, number of suppliers, technology,
expectations
Normal goods
Ans: as income increases, demand increases
Inferior goods
Ans: as income increases, demand decreases
Problem of price ceiling
Ans: creates shortage, inefficient allocation of the good, creates black markets
If we expect shortages
Ans: form lines, lottery
Arbitrage
Ans: buying in one market (low) selling in another market (high)
Competitive market "perfect"
Ans: lots of buyers and sellers, identical products, easy entrance and exit of market
Monopoly
Q&A
