ECON 201 Study Guide - Midterm Guide: Lemonade, Cheeseburger, Plywood
10 Oct 2017
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This chapte(cid:396) asks (cid:862)how a(cid:396)e p(cid:396)ices (cid:894)a(cid:374)d (cid:395)ua(cid:374)tities(cid:895) dete(cid:396)(cid:373)i(cid:374)ed? (cid:863) we a(cid:374)swe(cid:396) this (cid:395)uestio(cid:374) with the interaction of supply and demand. Once we have a good understanding here, we can apply our knowledge to predict and explain changes in price. This is a crucial skill to have and will be applicable in all walks of life. excess demand (shortage) Factors other than price that affect demand and supply. Market equilibrium (and why the equilibrium price is a reasonable price to expect) The main point of this chapter is to find a consistent way of measuring how sensitive consumers are to changes in price. The measure we come up with is the price elasticity of demand. There is an important relationship between elasticity and total expenditure/total revenue. The formula for elasticity (both the standard method and the midpoint method) This chapte(cid:396) asks (cid:862)how does government intervention affect (cid:373)a(cid:396)kets? (cid:863) Chapter 7: consumers, producers, and the efficiency of markets.
