Review of Review of Microeconomics:Microeconomics:

Demand, Supply and Demand, Supply and PricesPrices

1.1. Write answers to the following Write answers to the following without looking them up or asking without looking them up or asking anyone else. anyone else.

2.2. Correct or add to your answers as Correct or add to your answers as we go over them.we go over them.

1. Explain in detail.1. Explain in detail.

2. Explain in detail.2. Explain in detail.

3. Explain3. Explain

$100$100 550550

$95$95 525525

$90$90 500500

$85$85 475475

$80$80 450450

$75$75 425425

$70$70 400400

$65$65 375375

4. Explain4. Explain

$10.00$10.00 100100

$9.50$9.50 150150

$9.00$9.00 200200

$8.50$8.50 250250

$8.00$8.00 300300

$7.50$7.50 350350

$7.00$7.00 400400

$6.50$6.50 450450

5. Explain.5. Explain.

6. Explain what happens at the 6. Explain what happens at the price shown.price shown.

7. Explain what happens at the 7. Explain what happens at the price shown.price shown.

8. Explain diminishing 8. Explain diminishing marginal utility.marginal utility.

9. Explain the effect of 9. Explain the effect of diminishing marginal diminishing marginal

utility on demand.utility on demand.

10. Explain. Also, what can 10. Explain. Also, what can make this happen? What make this happen? What

cannot make this happen?cannot make this happen?

11. For each category, 11. For each category, give an example that give an example that

would change the would change the demand for iPods.demand for iPods.

12. Explain. Also, what can 12. Explain. Also, what can make this happen? What make this happen? What

cannot make this happen?cannot make this happen?

13. For each category, 13. For each category, give an example that give an example that

would change the would change the supply for iPods.supply for iPods.

14. Explain. Also, what can 14. Explain. Also, what can make this happen? Is there make this happen? Is there

anything else that can make anything else that can make this happen?this happen?

15. Explain the income 15. Explain the income effect. How is it different effect. How is it different

from a change in from a change in consumer income?consumer income?

16. Explain the 16. Explain the substitution effect. How substitution effect. How

is it different from a is it different from a change in price of a change in price of a

substitute?substitute?

17. Explain. Also, what can 17. Explain. Also, what can make this happen? Is there make this happen? Is there

anything else that can make anything else that can make this happen?this happen?

18. Explain. What caused the 18. Explain. What caused the new price? What happened new price? What happened because of the new price?because of the new price?

19. Explain. What caused the 19. Explain. What caused the new price? What happened new price? What happened because of the new price?because of the new price?

20. For each, what happens to 20. For each, what happens to the quantity sold? For each, the quantity sold? For each,

what happens to price?what happens to price?a.a. Increase in demandIncrease in demand

b.b. Increase in supplyIncrease in supply

c.c. Decrease in demandDecrease in demand

d.d. Decrease in supplyDecrease in supply

21. Refer to the events you 21. Refer to the events you wrote for question #11.wrote for question #11.

a.a. Which events would increase both Which events would increase both the price and the quantity sold? the price and the quantity sold?

b.b. Which events would increase the Which events would increase the price but decrease the quantity sold? price but decrease the quantity sold?

c.c. Which events would decrease the Which events would decrease the price but increase the quantity sold?price but increase the quantity sold?

d.d. Which events would decrease both Which events would decrease both the price and the quantity sold?the price and the quantity sold?

22. Refer to the events you 22. Refer to the events you wrote for question #13.wrote for question #13.

a.a. Which events would increase both Which events would increase both the price and the quantity sold? the price and the quantity sold?

b.b. Which events would increase the Which events would increase the price but decrease the quantity sold? price but decrease the quantity sold?

c.c. Which events would decrease the Which events would decrease the price but increase the quantity sold?price but increase the quantity sold?

d.d. Which events would decrease both Which events would decrease both the price and the quantity sold?the price and the quantity sold?

23. Explain the difference.23. Explain the difference.

24. Explain how to 24. Explain how to estimate elasticity of estimate elasticity of

demand.demand.

25. What happens to 25. What happens to demand elasticity in demand elasticity in

a specific (rather a specific (rather than general than general

market)?market)?

26. Explain how to 26. Explain how to calculate elasticity of calculate elasticity of

demanddemand

27. Explain how a 27. Explain how a consumer is affected consumer is affected by demand elasticity.by demand elasticity.

28. Explain the difference.28. Explain the difference.

29. Explain how to 29. Explain how to estimate elasticity of estimate elasticity of

supply.supply.

30. Explain how to 30. Explain how to calculate elasticity of calculate elasticity of

supply.supply.

31. Explain how a 31. Explain how a consumer is affected by consumer is affected by

supply elasticity.supply elasticity.