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AP Micro Unit 2 Test
Ap micro unit 2 test
| Question | Answer |
|---|---|
| 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 Substitutability % of income Time | 4 Determinants of Elasticity of Demand |
| Time Substitutability % 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 divided by Change in price divided by the sum of prices/2 |
Created by:
erikmurphy
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