Chapters 4 & 5 Micro Study Guide.docx - Chapters 4 5 Study Guide AP Microeconomics Key Concepts Competitive market Law of demand demand schedule

Chapters 4 & 5 Micro Study Guide.docx - Chapters 4 5...

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Chapters 4 & 5 Study Guide AP Microeconomics Key Concepts Competitive market Law of demand demand schedule quantity demanded demand curve change in demand substitutes complements normal good inferior good Law of Supply quantity supplied supply schedule supply curve change in supply equilibrium equilibrium price equilibrium quantity surplus shortage Law of supply and demand
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Elasticity Elastic inelastic unit elastic price elasticity of demand total revenue income elasticity of demand cross-price elasticity of demand price elasticity of supply Questions 1. Why does the demand curve slope downward? 2. Does a change in consumers’ tastes lead to a movement along the demand curve or a shift in the demand curve? Does a change in price lead to a movement along the demand curve or a shift in the demand curve? 3. Popeye’s income declines and, as a result, he buys more spinach. Is spinach an inferior or a normal good? What happens to Popeye’s demand curve for spinach? 4. Why does the supply curve slope upward? 5. Does a change in producers’ technology lead to a movement along the supply curve or a shift in the supply curve? Does a change in price lead to a movement along the supply curve or a shift in the supply curve? 6. Soda and pizza are complements because they are often enjoyed together. When the price of soda rises, what happens to the supply, demand, quantity supplied, quantity demanded, and the price in the market for pizza?
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