AP Micro Unit 2 Test
Ap micro unit 2 test
|Law Of Demand ||As Price goes up Quantity Demanded goes down and vice versa
|Law of Supply ||As price goes up Quantity Supplied goes up and vice versa|
|Change in buyers tastes and preferences.
Change in income.
Change in # of consumers.
Change in prices of related goods.
Change in expectation. ||5 Determinants of Demand|
|Change in resource prices.
Change in technology.
Change in taxes and subsidies.
Change in expectations.
Change in # of suppliers.
Change in prices of related goods. ||6 Determinants of Supply|
|Change in expectation ||The weatherman stated that this summer would be the hottest summer in history.|
|Change in Taste or Preferences ||Scientists at Columbia University believe that Hawaiian Punch could increase life expectancy. |
|Change in income ||I got a raise today and I want steak.|
|Change in number of consumers ||9 months after prom there were many babies born which increased the demand for diapers.|
|Change in Prices of Related Goods ||1 gallon of milk cost me 1 dollar but cereal cost me 10. |
|Change in Resource Prices ||The price of wood jumped from 50 to 100 so we have to produce less.|
|Change in technology ||The new chef master 5000 can make any food for any restaurant. |
|Changes in taxes and subsidies ||The government taxes the paper company a 5 dollar tax for every log the chop down.|
|Change in number of suppliers ||More drug stores are opening up allowing for more possibly cheaper options |
|Normal Goods ||A good/service whose consumption increases when income increases and vice versa. (price stays the same)|
|Inferior Goods ||A good/service whose consumption declines as income increases.|
|Complementary Goods ||Goods that are usually used or demanded together.|
|Substitute Goods ||One good that can be used in place of another.|
|Complementary goods ||What kind of goods are socks and shoes?|
|Substitute goods ||Chicken is too expensive so I am going to buy turkey|
|Inelastic Demand ||any value below 1. Demand for these products is relatively insensitive to price changes. Hard to Substitute.|
|Elastic Demand ||any value above 1. The demand of these products is very sensitive to price changes. Easily substitutable. |
|Unit Elastic Demand ||any value equaling 1. Equilibrium.|
|Luxury Vs. Necessity
% of income
Time ||4 Determinants of Elasticity of Demand|
% of Income
Luxury v. Necessities ||Determinant of Elasticity of Supply |
|Market Period ||Supply cant change |
|Short Run ||can change supply by altering variable costs|
|Long Run ||Change in all your costs |
|Midpoint Formula ||Change in quantity divided by the Sum of Quantites/2
Change in price divided by the sum of prices/2 |