practicequestions2spring2004

practicequestions2spring2004 - 1 Economics 102 Spring 2004...

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Economics 102 Spring 2004 Practice Questions-2 I. Concepts Covered: Law of Demand Law of Supply Demand vs Quantity Demanded Supply vs Quantity Supplied Demand Shifters Supply Shifters Normal Good Inferior Good Substitute Complement Price Ceiling Price Floor II. True/False and Explain 1. Recent issues with Mad Cow Disease caused a decline in amount of beef demanded. 2. The Law of Demand states that demand falls as price rises. 3. An increase in the price of an input will decrease the quantity supplied. 4. In a market economy consumers determine the equilibrium quantity and price. III. Fill in the Blanks 1. The market demand curve is the sum of individual demand curves. 2. An increase in the price of a will increase the demand for the good. 3. When is equal to prices have no tendency to change. This is called . 4. A change in tastes or expectations leads to a change in . That is why, tastes and expectations are called . 5. The government decided to help corn farmers, and declared the price of corn can be no less than 30 cents a ear this summer. This price is an example of a . 6. As your income increases you buy fewer packages of Ramen Noodles. Ramen Noodles is a(n) . 7. Shoes are a normal good since you buy of them as your income increases. IV. Problems 1. Suppose the demand and supply curve for queen-size down comforters in Madison is: Q d = 7500– 60P d Q s = - 2000 + 40P s a. Draw the Supply and the Demand curves and find the equilibrium price and quantity. b. Calculate consumer surplus, producer surplus, and the dead-weight loss. c.
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practicequestions2spring2004 - 1 Economics 102 Spring 2004...

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