3. Owens, Inst, ' ' . MICROECONOMICS
Review Questions - Exam 3.
What is the income effect? Substitution effect?
What is utility, marginal away and diminishing marginal utility?
Be able to graph total utility curve and marginal utility curve
1) Income effect- change in the quantity demanded of a product that results from the change
in real income cause by a change in the products price.
Substitution effect- a change in quantity demanded of a consumer good that results from
a change in its rel
MICRO STUDY GUIDE (BILLY)
1. What are the characteristics of pure competition?
a. Many sellers means that there are enough so that a single seller has no impact on price by
its decisions alone.
b. The products in a purely competitive market are homogeneou
1. What is the definition of price of elasticity of demand?
a. Measures how responsive or how sensitive consumers are to the
quantities they buy when price changes.
2. What is the point elasticity formula? What are the two times we should use
Exam 3 Study Guide
1. What is the income effect? Substitution effect?
a. Income effect: change in the quantity demanded of a product that results
from the change in real income caused by a change in the products price.
b. Substitution effect: a change in