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Microeconomics Unit 2: Understanding Demand and Supply, Exams of Microeconomics

Katholieke Hogeschool LeuvenMicroeconomics

A study guide for Unit 2 of Microeconomics, focusing on the Law of Demand and Supply, demand and supply schedules, demand and supply curves, elastic and inelastic demand and supply, and factors that shift demand and supply. Students are encouraged to review slideshows, assignments, quizzes, and prepare for unit tests by answering questions and drawing graphs related to the content.

Typology: Exams

2021/2022

Uploaded on 08/05/2022

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Unit 2: Microeconomics
Microeconomics is the study of the economic behavior of individuals (people, businesses or industries) in a market economy. Microeconomics studies factors that
determine the economic choices of individuals, how these choices influence the demand and supply of products and the how prices are determined.
Essential Questions
What factors effect demand and supply in a market economy?
How do economists graphically represent demand & supply trends?
What factors cause changes in market equilibrium (prices)?
Text Reading & Key Vocabulary
Chapter 4: Law of Demand, Demand Schedule, Demand Curve, Factors that Shift Demand (NICEST), Elastic & Inelastic Demand
Chapter 5: Law of Supply, Supply Schedule, Supply Curve, Elastic & Inelastic Supply, Factors that Shift Supply (TINGED)
Chapter 6: Equilibrium, Excess Demand, Excess Supply, Price Controls, Price Ceilings, Price Floors
How to Prepare For Unit Test on Tuesday 3/10 (3°) or Wednesday 3/11 (4°)
1) Review Slideshows & Assignments #6, #7 and #9 –Be sure you can actually answer questions WITHOUT NOTES
2) Review Quizzes # 3 & #4 –Be sure you understand and can draw the graphs WITHOUT NOTES
Do Jeopardy Review Game created by another teacher independently
Do not worry about time limit or if you get some wrong…Focus on understanding the answers
A few questions are on topics we did not emphasize in class
Your unit test will focus on what was covered in class (but WITHOUT NOTES)…see upcoming review slides
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Unit 2: Microeconomics Microeconomics is the study of the economic behavior of individuals (people, businesses or industries) in a market economy. Microeconomics studies factors that determine the economic choices of individuals, how these choices influence the demand and supply of products and the how prices are determined. Essential Questions What factors effect demand and supply in a market economy? How do economists graphically represent demand & supply trends? What factors cause changes in market equilibrium (prices)? Text Reading & Key Vocabulary Chapter 4: Law of Demand, Demand Schedule, Demand Curve, Factors that Shift Demand (NICEST), Elastic & Inelastic Demand Chapter 5: Law of Supply, Supply Schedule, Supply Curve, Elastic & Inelastic Supply, Factors that Shift Supply (TINGED) Chapter 6: Equilibrium, Excess Demand, Excess Supply, Price Controls , Price Ceilings, Price Floors How to Prepare For Unit Test on Tuesday 3/10 (3°) or Wednesday 3/11 (4°)

  1. Review Slideshows & Assignments #6, #7 and #9 – Be sure you can actually answer questions WITHOUT NOTES
  2. Review Quizzes # 3 & #4 – Be sure you understand and can draw the graphs WITHOUT NOTES Do Jeopardy Review Game created by another teacher independently D o not worry about time limit or if you get some wrong…Focus on understanding the answers A few questions are on topics we did not emphasize in class Your unit test will focus on what was covered in class (but WITHOUT NOTES)…see upcoming review slides

UNIT 2 REVIEW QUESTIONS

Get out some scratch paper. You will be asked to answer questions & draw graphs related to the content we have learned this unit After some time to respond, the correct answers will be shown…assess yourself & ask questions if needed. You will be asked questions on these topics on the unit test next class and will not have access to notes.

  1. Law of Demand states that if the price of a product INCREASES, the quantity demand for that product will DECREASE
  2. Law of Supply states that if the price of a product INCREASES, the quantity supplied of that product will INCREASE
  3. When illustrated on a graph, a Demand curve slopes DOWN
  4. When illustrated on a graph, a Supply curve slopes UP
  1. Draw a graph with properly labeled axes that illustrate a supply curve, a demand curve, the equilibrium price labeled as P* and equilibrium quantity labeled as Q*
  2. Draw a graph for the coffee market with properly labeled axes that illustrates the information in the table below. Label the equilibrium price as P* and equilibrium quantity as Q*
  1. What are any THREE factors that can shift the overall demand (either increase or decrease) consumers have for a particular product?
  2. What are any THREE factors that can shift the overall supply (either increase or decrease) producers make of a particular product?
  1. Any 3 of these (^) 7) Any 3 of these

8 ) Changes in Price alone DO NOT shift supply or demand for products initially…price change alone only causes change in quantity demanded or supplied along existing supply or demand curve

  1. Draw a graph with properly labeled axes that illustrates an increase in overall DEMAND with the original equilibrium price labeled as P1 & original equilibrium quantity labeled as Q1. The new demand curve should be labeled as D2 and new price and quantity as P2 & Q
  2. Draw a graph with properly labeled axes that illustrates an increase in overall SUPPLY with the original equilibrium price labeled as P1 & original equilibrium quantity labeled as Q1. The new supply curve should be labeled as S2 and new price and quantity as P2 & Q
  1. If consumers are not likely to buy an item after a small increase in the price of the item, their demand for that product is said to be ______________
  2. If consumers are likely to still purchase an item despite an increase in price, their demand for that product is said to be _________
  3. What are TWO factors that might influence how much the demand consumers have for an item is influenced by changes in price?
  1. What are TWO factors that might influence how much the demand consumers have for an item is influenced by price? SEE LIST ON THE RIGHT:
  2. If consumers are not likely to buy an item after a small increase in the price of the item, their demand for that product is said to be ELASTIC
  3. If consumers are likely to still purchase an item despite an increase in price, their demand for that product is said to be INELASTIC

  1. ANY TWO of these factors can influence how sensitive a producer is to price Time to Produce …Long time = Inelastic Supply & Short Time = Elastic Supply Factors (Supplies) Needed to Produce …Many = Inelastic Supply & Few = Elastic Supply Capacity to Produce …Little = Inelastic Supply & Lots = Elastic Supply Inventory of Product …Little = Inelastic Supply & Lots = Elastic Supply

  3. When the government sets a price in a market that is BELOW the natural equilibrium, this is called a ________

  4. Draw a graph of the situation described above and indicate if this would lead to a surplus or shortage in the market.

  5. When the government sets a price in a market that is ABOVE the natural equilibrium, this is called a ________

  6. Draw a graph of the situation described above and indicate if this would lead to a surplus or shortage in the market.