ECON 201 Exam questions and
answers well graded 100%
Law of Demand - ANS✅✅The law of demand is a microeconomic law that states, all other factors
being equal, as the price of a good or service increases, consumer demand for the good or service
will decrease, and vice versa.
Law of Supply - ANS✅✅The law of supply is a fundamental principle of economic theory which
states that, all else equal, an increase in price results in an increase in quantity supplied. In other
words, there is a direct relationship between price and quantity: quantities respond in the same
direction as price changes.
Law of Substitutes - ANS✅✅Substitute goods are goods which, as a result of changed conditions,
may replace each other in use (or consumption). A substitute good, in contrast to a complementary
good, is a good with a positive cross elasticity of demand. This means a good's demand is increased
when the price of another good is increased.
Law of Complements - ANS✅✅A good or service that is used in conjunction with another good or
service. Usually, the complementary good has little to no value when consumed alone but, when
combined with another good or service, it adds to the overall value of the offering. Also, good tends
to have more value when paired with a complement than it does by itself.
Law of Increasing Cost - ANS✅✅In economics, the law of increasing costs is a principle that states
that once all factors of production (land, labor, capital) are at maximum output and efficiency,
producing more will cost more than average. As production increases, the opportunity cost does as
well.
Law of Diminishing Returns - ANS✅✅The law of diminishing marginal returns is the law of
economics stating that, as the number of new employees increases, the marginal product of an
additional employee will at some point be less than the marginal product of the previous employee.
Perfect Competition - ANS✅✅Perfect competition is a market structure in which the following five
criteria are met: 1) All firms sell an identical product; 2) All firms are price takers - they cannot
control the market price of their product; 3) All firms have a relatively small market share; 4) Buyers
have complete information about the product being sold and the prices charged by each firm; and 5)
The industry is characterized by freedom of entry and exit. Perfect competition is sometimes
referred to as "pure competition".
answers well graded 100%
Law of Demand - ANS✅✅The law of demand is a microeconomic law that states, all other factors
being equal, as the price of a good or service increases, consumer demand for the good or service
will decrease, and vice versa.
Law of Supply - ANS✅✅The law of supply is a fundamental principle of economic theory which
states that, all else equal, an increase in price results in an increase in quantity supplied. In other
words, there is a direct relationship between price and quantity: quantities respond in the same
direction as price changes.
Law of Substitutes - ANS✅✅Substitute goods are goods which, as a result of changed conditions,
may replace each other in use (or consumption). A substitute good, in contrast to a complementary
good, is a good with a positive cross elasticity of demand. This means a good's demand is increased
when the price of another good is increased.
Law of Complements - ANS✅✅A good or service that is used in conjunction with another good or
service. Usually, the complementary good has little to no value when consumed alone but, when
combined with another good or service, it adds to the overall value of the offering. Also, good tends
to have more value when paired with a complement than it does by itself.
Law of Increasing Cost - ANS✅✅In economics, the law of increasing costs is a principle that states
that once all factors of production (land, labor, capital) are at maximum output and efficiency,
producing more will cost more than average. As production increases, the opportunity cost does as
well.
Law of Diminishing Returns - ANS✅✅The law of diminishing marginal returns is the law of
economics stating that, as the number of new employees increases, the marginal product of an
additional employee will at some point be less than the marginal product of the previous employee.
Perfect Competition - ANS✅✅Perfect competition is a market structure in which the following five
criteria are met: 1) All firms sell an identical product; 2) All firms are price takers - they cannot
control the market price of their product; 3) All firms have a relatively small market share; 4) Buyers
have complete information about the product being sold and the prices charged by each firm; and 5)
The industry is characterized by freedom of entry and exit. Perfect competition is sometimes
referred to as "pure competition".
