MGEB02H3 Chapter Notes - Chapter 1-2: Complementary Good, Demand Curve, Microeconomics

50 views2 pages

blushhippopotamus560

24 Jun 2018

School

UTSC

Department

Economics for Management Studies

Course

MGEB02H3

Professor

A.Mazaheri

For unlimited access to Textbook Notes, a Class+ subscription is required.

MGEB02- Chapter 1

I) The themes of microeconomics

1) Positive vs Normative analysis

Positive analysis describes the relationships of cause and effect; what will happen to

the price, production and sales of cars if the Government imposes a quota on foreign

imported cars?

Normative analysis is an analysis examining questions of what ought to be, what is

best? For example, if the government decides to put in place a new tax on gasoline,

car manufacturers would want to determine the best (profit-maximizing) mix of large

and small cars to produce, and how much money spent on making cars more fuel-

efficient.

MGEB02- Chapter 2

I) Supply and demand

1) The supply curve

The Supply curve shows the quantity of a good that producers are willing to sell at a

given price, holding constant many other factors that might affect the quantity

supplied.

The X-axis shows the quantity per unit (Q) and the Y-axis the price per unit (P).

find more resources at oneclass.com

Unlock document

This preview shows half of the first page of the document.
Unlock all 2 pages and 3 million more documents.

Already have an account? Log in

Document Summary

The supply curve shows the quantity of a good that producers are willing to sell at a given price, holding constant many other factors that might affect the quantity supplied. The x-axis shows the quantity per unit (q) and the y-axis the price per unit (p). The supply curve is the relationship between the quantity of supplied and the price. We can write this relationship as an equation: The supply curve (s) slopes upward meaning the higher the price, the more the firms are able and willing to produce and sell. The demand curve shows how much of a good consumers are willing to but as the price per unit changes. We can write this relationship between quantity demanded and price as an equation: The demand curve (d) slopes downward meaning consumers are willing to buy more of a product if the price is lower.

Related Questions

When demand for a good is very elastic, revenue ________ when the price falls.

(2)

An elasticity measure less than one means that demand is __________.

(3)

An elasticity measure greater than one means that demand is __________.

(4)

The Latin expression ceteris paribus means

	having made all other necessary changes.
	holding constant all other variables.
	assuming all households have similar incomes.
	given the level of income in the economy.

(5)

A variable measured in terms of money is called a ____________________.

	real variable
	nominal variable
	macroeconomic variable
	microeconomic variable

(6)

Which of the following is true about the importance of money in economics?

	Money is important in both macroeconomics and microeconomics.
	Money is important in macroeconomics but not microeconomics.
	Money is important in microeconomics but not macroeconomics.
	Money is not important in either microeconomics or macroeconomics.

(7)

What is the difference between normative and positive economics?

	Positive economics is descriptive and predictive; normative economics is prescriptive.
	Positive economics highlights the positive aspects of the economy; normative economics highlights the average features.
	Positive economics studies the actions of individuals; normative economics studies the actions of households.
	Positive economics is an applied social science; normative economics is a theoretical social science.

(8)

The slope of the demand curve is negative because

	the quantity of a good demanded decreases as income declines.
	the quantity of a good demanded increases as income declines.
	the quantity of a good demanded increases as the price declines.
	the quantity of a good demanded decreases as the price declines.

(9)

What is the result of an increase in the price of bread, a normal good?

	The demand curve shifts to the right.
	The demand curve shifts to the left.
	The quantity demanded increases.
	The quantity demanded decreases.

(10)

What is the effect on demand for bread when the price of bagels, a substitute for bread, rises?

	The demand curve for bread shifts to the right.
	The demand curve for bread shifts to the left.
	The quantity of bread demanded increases.
	The quantity of bread demanded decreases.

(11)

Which of the following would cause the supply curve for bread to shift inward?

	An increase in the price of bread
	An increase in the price of bagels
	A decrease in the price of bread
	An increase in the price of flour

(12)

An improvement in technology shifts the supply curve outward because

	at every price, firms find producing the good to be more profitable.
	the price of the good increases.
	at every price, firms find producing the good to be less profitable.
	the price of the good decreases.

(13)

Which of the following factors does not affect how much bread a baker is willing to produce?

	The price of bread
	The demand for bread
	The cost of inputs
	Technology

(14)

How do expectations of prices affect how much of a good producers are willing to sell?

	Expectations of prices affect only demand, not supply.
	Actual prices, not expectations of prices, affect supply.
	If producers expect prices to fall in the future, they supply less at every price.
	If producers expect prices to rise in the future, they supply less at every price.

(15)

When the price of a good is above equilibrium level,

	the quantity demanded exceeds the quantity supplied.
	the quantity supplied exceeds the quantity demanded.
	the supply curve shifts to the left.
	the supply curve shifts to the right.

(16)

At a price of P₀ in the diagram below, which of the following statements is true?

	Supply equals demand.
	There is excess demand.
	There is excess supply.
	There is scarcity.

(17)

If demand for bread increases at every price, the equilibrium price of bread will

	fall.
	rise.
	remain unchanged.
	depend on income.

(18)

If the demand for bread declines, then

	at the original equilibrium price, there is excess demand.
	at the original equilibrium price, there is excess supply.
	the supply curve shifts to the right.
	the supply curve shifts to the left.

(19)

Peanut butter and jelly are complementary goods. When the price of peanut butter rises, the demand for jelly ________ and the price of jelly ________.

	rises; falls
	rises; rises
	falls; rises
	falls; falls

(20)

The measure of elasticity that economists use is

	always a positive number.
	always a negative number.
	positive when demand is elastic and negative when demand is inelastic.
	negative when demand is elastic and positive when demand is inelastic.

(21)

Which of the following formulas is the correct expression for the slope of a line?

(22)

Graphically how would an increase in income affect the demand for hamburgers?

	The slope of the demand curve would increase.
	The slope of the demand curve would decrease.
	The demand curve would shift outward, parallel to the original demand curve.
	The demand curve would shift inward, parallel to the original demand curve.

(23)

Given the equation P = $6.00 ? $.40Q, where P is the price of the good and Q is the quantity of the good demanded, how many units will this consumer demand if the price is $3.60?

	1.44 units
	3 units
	3.6 units
	6 units

(24)

Which of the following is true about unit elasticity?

	Revenues remain unchanged when the price changes.
	Elasticity of demand increases as one moves down the demand curve.
	Elasticity of demand decreases as one moves down the demand curve.
	The elasticity of demand is greater than one at every point along the demand curve.

(25)

Which of the following could be a determinant of the quantity demanded of a good?

	The price of the good
	The price of related goods
	Income
	Expectations about the future price of the product
	All of the above

violethare488

1) Suppose the equations for demand and supply of Toyota Camry cars can be represented by the following equations

P = 100,000 - 2Q and P = 2000 + 0.5Q.

Calculate the equilibrium quantity and equilibrium price

2) Suppose that Toyota decides to include an extended warranty on these cars at no extra cost if the car is purchased with the current month.

Based on the statement above, identify which of the following two demand curves could represent the new demand for Toyota Camry cars (Choose one of these two)

i: Curve 1 : P = 105000-2Q

ii : Curve 2 : P = 95000-2Q

Explain why you choose this particular demand curve

3) Using the same demand-supply curves given in (a) part suppose the government decides to introduce a per - unit tax of $1000 on sellers of these cars. Draw a fully-labeled diagram to demonstrate the impact of this on the market for Toyota Camry cars.

4) Explain your diagram in part (3) Explain whether the effect of the tax on the market is efficient

azurelion143

1) Suppose the equations for demand and supply of Toyota Camry cars can be represented by the following equations:

P = 100,000 - 2Q and P = 2000 + 0.5Q.

Calculate the equilibrium quantity and equilibrium price.

2) Suppose that Toyota decides to include an extended warranty on these cars at no extra cost if the car is purchased with the current month.

a). Based on the statement above, identify which if the following two demand curves could represent the new demand for Toyota Camry cars (Choose one of these two:

i. Curve 1 : P = 105000-2Q

ii. Curve 2 : P = 95000-2Q

explain why you choose this particular demand curve.

3) Using the same demand-supply curves given in (a) part suppose the government decides to introduce a per - unit tax of $1000 on sellers of these cars. Draw a fully-labelled diagram to demonstrate the impact of this on the market for Toyota Camry cars.

4) Explain your diagram in part (3) Explain whether the effect of the tax on the market is efficient.

azurelion143

MGEB02H3 Chapter Notes - Chapter 1-2: Complementary Good, Demand Curve, Microeconomics

Document Summary

Get access

Related Documents

MGEB02H3 Study Guide - Midterm Guide: Arc Elasticity, Gross Domestic Product, Demand Curve

MGEB02H3 Midterm: Midterm Review Ch1-4

MGEB02H3 Chapter Notes - Chapter 1-6: Giffen Good, Risk Premium, Isoquant

Related Questions