Demand/Supply
Is the supply curve upward sloping or downward sloping?
Upward
If there is a decrease in demand, in which direction does the curve shift?
Left
Which market structure has the same name as a board game?
Monopoly
What is an example of a fixed cost?
Rent, Insurance, Manager Salaries
True/False
Is the government able to fix prices?
True
The point where supply and demand meet on the graph is known as
Equilibrium
If there is a change in the price of a good, does the demand or supply curve shift? Yes or No?
NO
What are barriers of entry?
Things that prevent firms from entering into a market
What is the formula for total costs?
Fixed costs plus variable costs
What is a price floor?
Minimum legal price a seller can sell a product.
Give an example of a normal and an inferior good
Inferior- Goods that will always be bought
If the number of sellers in a market decreases, what will happen to the supply of the good and which way will the supply curve shift?
Decrease and to the left
Which market structure is considered a "price maker?"
Monopoly
What is the profit maximizing rule?
MR=MC
What is a subsidy?
A per unit payment to producers. The government gives money to producers to make more.
What does the law of demand state? What does the law of supply state?
Law of Demand = There is an inverse relationship between price and quantity demanded
Law of Supply = There is a positive relationship between price and quantity demanded
Name three out of the 5 shifters (Determinates) of Supply
1. Prices/Availability of inputs (resources)
2. Number of Sellers
3. Technology
4. Government Action: Taxes & Subsidies 5. Expectations of Future Profit
This type of market structure has a relatively large number of sellers, differentiated products, some control over prices, and low barriers of entry.
Which of the four is it?
Monopolistic Competition
How do you find a firms total revenue?
Price x Quantity Sold
Does a price ceiling result in a shortage or a surplus?
Also, is Qd or Qs larger when there is a price ceiling?
Shortage, and quantity demanded is larger
If the price of a substitute good increases, what happens to the demand for the other good?
If the price of a compliment good increases, what happens to the demand for the other good?
Substitutes = Increase
Compliments = Decrease
We are analyzing hamburgers. Will demand increase or decrease in each of the following scenarios?
1. Population boom
2. Incomes fall due to recession
3. Price of tacos, a substitute, decreases 4. Hamburger restaurants announce that they
will significantly increase prices NEXT month 5. Price of fries, a complement, increases
1. Increase
2. Decrease
3. Decrease
4. Increase
5. Decrease
Give an example of each type of Market Structure
PC - Corn, Strawberries, Produce, Milk
Monopoly- Electric Company, De Beers
Oligopoly- Cars, Cell phones, service providers
MC- Fast food, furniture, shoe stores
If a firm is producing 6 units of output at a price of $30 for each product, and their total costs are 120$, how much profit did the firm make?
$60
What happens to the supply/demand graph when an excise tax is placed on producers?
Does quantity increase or decrease? Does price increase or decrease?
What curve shifts and which way does it shift?
Price increases, quantity decreases, and the supply curve shifts to the left