ECON 2000 : Rough Outline Of Final Review
Document Summary
Econ 2000: things you need to know before. Chapter 4: law of demand/supply, law of demand- quantity demanded rises as price falls, other things constant. Quantity demanded falls as price rises, otc: this is due to the substitution effect- when the price of something goes up, people buy cheaper substitutes, law of supply- qty supplied rises as price rises, otc. Qty supplied falls as price falls, otc: this is due to the opportunity cost of not producing and selling as a price rises. At lower prices, new demanders enter the market: supply- existing customers supply more when price increases. Chapter 5: demonstrate the effect of a price ceiling and price floor, price ceiling- govt. imposed limit on how high a price can be charged. Rent control: quantity demanded will exceed quantity supplied and there will be excess demand-causing a shortage of supply, price floor- a govt. imposed limit on how low a price can be charged.
