ECON 101 Study Guide - Midterm Guide: Deadweight Loss, Midpoint Method, Demand Curve

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ECON 101 Full Course Notes

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The law of demand the quantity demanded of a good is inversely related to the price of that good, holding other factors constant. Law of diminishing marginal value = reason indv demand curves are downwards sloping. Consumer surplus (cs) (net benefits to a consumer) cs = tv te. P how much the consumer must give up for each additional unit consumed. Mv - how much the consumer is willing to give up for each additional unit consumed. Will continue to consume as long as mv for an additional unit > price. Will stop consuming good at point where mv = p. Height of demand curve at given q = mv of the good at that quantity. Area under demand curve up to q consumed = tv for all consumers in market. Area btw demand curve and p = cs gained for all consumers in market. Law of demand = as price falls, q demanded increases.

Related Questions

Demand curve is P=-Q+90 and the supply curve is P=0.5Q

1- find equilibrium price and quantity

2- whats the level of total expenditure in the market?

3- whats the price elasticity of demand at the equilibrium?

4- calculate consumer surplus

5- if there's a law to prevent you from consuming this good, how much should you be compensated by the government to accept it?

budget line

marginal utility

complete property of preferences

market demand

consumption bundle

substitution effect

Giffen good

total effect

income effect

transitive property of preferences

indifference curves

utility

the marginal rate of substitution

utility function

1.	_____	The satisfaction or benefit that consumers receive from consuming goods or services.
2.	________________ _	A particular combination of specific quantities of goods or services
3.	________________ _	Consumers can rank all conceivable bundles of goods or services
4.	_____	If A is preferred to B, and B is preferred to C, then A is always preferred to C.
5.	_____	Equation showing a consumerâs perception of the total utility forthcoming from consuming each bundle of goods and services.
6.	_____	A set of consumption bundles each and every one of which provides a consumer with exactly the same level of total utility.
7.	_____	The number of units of Y that must be given up for total utility to remain the same when one more unit of X is consumed.
8.	_____	The addition to total utility attributable to consuming one more unit of a good, holding the consumption of all other goods constant.
9.	_____	The line showing all bundles of goods that can be purchased at given prices if the entire income is spent.
10.	_____	The change in the consumption of a good that would result if the consumer remained on the original indifference curve after the price of the good changes.
11.	_____	The change in consumption of goods results strictly from the change in purchasing power after the price of a good changes.
12.	________________ _	The sum of the substitution and income effects.
13.	_____	A good for which quantity demanded varies directly with price, causing an upward sloping demand curve.
14.	_____	A list of prices and the corresponding quantity consumers are willing and able to purchase at each price.

blushwildebeest943

Q 1: Below is a production possibilities table for consumer goods and capital goods : Production Alternatives Capital Goods Consumer Goods A 0 70 B 3 65 C 6 55 D 9 40 E 12 20 F 15 0 a. Show these data graphically. Upon what speciﬁc assumptions is this production possibilities curve based? b. If the economy is at point C, what is the cost of one more unit of capital good? Of one more unit of consumer good? Explain how the production possibilities curve reﬂects the law of increasing opportunity costs. c. If the economy characterized by this production possibilities table and curve were producing 7 units of capital goods and 45 units of consumer goods, what could you conclude about its use of its available resources? d. What would production at a point outside the production possibilities curve indicate? What must occur before the economy can attain such a level of production? e. Assume consumer good are bread and cookies here. What happens to this frontier if disease kills half of the economy’s hens and cows? Q 2(a): How does self-interest help achieve society’s economic goals? Why is there such a wide variety of desired goods and services in a market system? In what way are entrepreneurs and businesses at the helm of the economy but commanded by consumers? b. Why is private property, and the protection of property rights, so critical to the success of the market system? c. How the market system decides what to produce, how to produce it, and who obtains it. Q 3: How will each of the following changes in demand and/or supply affect equilibrium price and equilibrium quantity in a competitive market; that is, do price and quantity rise, fall, or remain unchanged, or are the answers indeterminate because they depend on the magnitudes of the shifts? Use supply and demand diagrams to verify your answers. i. Supply decreases and demand is constant. ii. Demand increases and supply increases. iii. Supply increases and demand decreases. b. Explain why the price in competitive markets settles down at the equilibrium intersection of supply and demand. Explain what happens if the market price starts out too high or too low. c. Consider the following events: Scientists reveal that consumption of oranges decreases the risk of Corona Virus and, at the same time, farmers use a new fertilizer that makes orange trees more productive. Illustrate and explain what effect these changes have on the equilibrium price and quantity of oranges.

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ECON 101 Study Guide - Midterm Guide: Deadweight Loss, Midpoint Method, Demand Curve

ECON 101 Full Course Notes

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