Chapter 3 Study Guide

Topics: Supply and demand, Economic equilibrium, Microeconomics Pages: 4 (309 words) Published: November 17, 2014
CHAPTER 3 STUDY GUIDE

VOCABULARY

Market Economy

Competitive Market

Imperfect Market

Monopoly

Quantity Demand

Law of Demand

Demand Schedule

Demand Curve

Market Demand

Normal Good

Inferior Good

Complements

Substitutes

Quantity Supplied

Law of Supply

Supply Schedule

Supply Curve

Market Supply

Inputs

Equilibrium

Equilibrium Price

Equilibrium Quantity

Law of Supply and Demand

Shortage

Surplus

REVIEW QUESTIONS

(1) Name 5 things that shift demand.
1.
2.
3.
4.
5.

(2) Name 5 things that shift supply.
1.
2.
3.
4.
5.

(3) Why does the demand curve slope downward?

(4) Why does the supply curve slope upward?

(5) Describe whether the demand increase or decrease for words in italics. a. The price of oranges increases.
b. The cost of producing tires increases.
c. Samantha Brown, who loves air travel, is fired from her job. (6) Describe whether the supply increase or decrease for words in italics. a. The price of silver increases.
b. Growers of tomatoes experience a great growing season.
c. New medical evidence states organic products reduce the risk of cancer.

(7) The market for ice cream has the following supply and demand schedule:

What are the equilibrium price and quantity in the ice cream market? Graph supply and demand curves.

(8) Demand and supply curves can also be represented by equations. Suppose that the quantity demanded, Qd, is represented by: . The quantity supplied Qs is represented by: Qs = P.

a. Find the equilibrium price and quantity. (HINT: Set Qd = Qs and solve for the price, P, and then plug your result back into either of the original equations to find Q).

b. Suppose that the price is $20. Determine Qd and Qs. Is there a surplus or shortage?

(9) The Seattle Mariners wish to determine the equilibrium price for seats for each of the next two seasons. The...
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