AP Microeconomics Ch. 2
AP Microeconomics Ch. 2 What are the four factors of production?
A visual model of the economy that shows how dollars flow through markets among households and firms is known as a _.
Circular Flow Diagram
07 October 2016
1 A) Since the demand curve illustrates lower demand as prices rise we could also say that
this means as the price increases, more consumers leave the market for the product
because they a
05 December 2016
1) The demand curve of a firm in perfect competition is perfectly elastic because if they charged
a price slightly above market price, the firm would not be able to sell any products.
14 November 2016
1) Market Structures (strongest to weakest)
Perfect competition - strongest competition in market
o A lot of firms with insignificant market share/power
o Price taker (cant determine pri
Chapter 4 Problems
21 September 2016
1 Since the price elasticity of demand for air travel is 8 demand is elastic. Since the price
elasticity of demand for gasoline is 0.2 demand is inelastic. Based on these two
Chapter 1 & 3 Homework
14 September 2016
1.) Marginal benefits will decrease as the quantity produced of that good increases.
A.) The substitute effect will decrease
04 November 2016
1) The consumer follows the Utility Maximizing Rule to maximize total utility. The consumers
incentive to change her spending if marginal utilities per dollar are not equal is that, if th
Government and Market Failure
Private Goods-include basically all the products we have discussed in class to this point.
Examples include: cars, clothing, personal computers Rivalry (nonshared consumption)-when one person consumes a product, it i
Industry in which economies of scale are so great that a single firm can produce the product at a lower ATC than would be possible if more than one firm produced the product.
Usually comes i
04 November 2016
b: i - Since berries will cost less, Jerry will be able to buy more and therefore have more
ii - Since Jerry's income increases, he