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ECO 201 Exam 2 Study Guide 30 Questions with Verified Answers (1) Demand - CORRECT ANSWER the quantity of a product that people are *willing* and *able* to buy during a specific period (2) Law of Demand - CORRECT ANSWER the *quantity* of a product *inversely* related to the *price* of the product, other things held constant (2) 'Other Things Held Constant ' - CORRECT ANSWER - indicates the effect of one economic variable on another, holding constant all other variables that may affect the second variable. -the dominant relationship is between quantity and demand, but there are other factors that go into quantity, which is ignored for now. (3) Shift factors of Demand - CORRECT ANSWER -the consumers taste and preferences ~the income of the customer -number of buyers ~prices of related goods -consumer expectations -taxes and substitutes (4) Substitute Goods - CORRECT ANSWER -Goods that are perceived as similar or comparable *
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(1) Demand - CORRECT ANSWER the quantity of a product that people are willing and able to buy during a specific period (2) Law of Demand - CORRECT ANSWER the quantity of a product inversely related to the price of the product, other things held constant (2) 'Other Things Held Constant ' - CORRECT ANSWER - indicates the effect of one economic variable on another, holding constant all other variables that may affect the second variable. -the dominant relationship is between quantity and demand, but there are other factors that go into quantity, which is ignored for now. (3) Shift factors of Demand - CORRECT ANSWER -the consumers taste and preferences ~the income of the customer -number of buyers ~prices of related goods -consumer expectations -taxes and substitutes (4) Substitute Goods - CORRECT ANSWER -Goods that are perceived as similar or comparable -When the price of one and the demand for the other move in the same direction (ex. tea and coffee) (4) Complementary Goods - CORRECT ANSWER -Goods that generate satisfaction when consumed together -The price of one and the demand of the other move in the opposite direction
(5) Movement Along the Demand Curve - CORRECT ANSWER This will indicate a change in price of a product (different at different prices) (5) Shift of the Demand Curve - CORRECT ANSWER this will indicate a change in one or more of the determinants (shift factors) of demand (6) Quantity Demanded - CORRECT ANSWER This refers to a point on the demand curve. Each point has a different price quantity combination. (6) Demand (Demand Curve) - CORRECT ANSWER This refers to the entire demand for a product (7) When price decreases, why will the market increase? - CORRECT ANSWER - new customers will demand the product
-the excess of the quantity supplied over the quantity demanded when the price is above equilibrium (10) Market Shortage - CORRECT ANSWER -excess demand -the excess of quantity demanded over the quantity supplied when the price is below equilibrium (11) The three laws of supply and demand - CORRECT ANSWER 1. When quantity demanded is greater than quantity supplied, prices will increase (shortage) when quantity supplied is greater than quantity demanded prices will fall (surplus)
(1B) Leakages - CORRECT ANSWER Taxes (T) + Savings (S) + Imports (IM) =? (1B) Injections - CORRECT ANSWER Government (G) + Investment (I) + Exports (EX) =? (1C) Private Sector - CORRECT ANSWER The part of the economy that is not state controlled, and is run by individuals and companies for profit. (1C) Public Sector - CORRECT ANSWER The part of the economy concerned with providing basic government services.