Review Questions: Price Elasticity
Why do we prefer to analyze relative change in demand relations and not absolute
How does price elasticity differ from the slope of a demand curve?
If you read that the demand for airline tickets is very price e
CHAPTER ONE STUDY GUIDE:
Scarcity: means that society has limited resources and therefore cannot produce all the
goods and services people wish to have.
Economics: is the study of how society manages its scarce resources.
how people make
CHAPTER TWO STUDY GUIDE:
Economists devise theories, collect data and then analyze data in attempt to verify or
refute their theories.
Scientific Method: the dispassionate development and testing of theories about how
the world works.
Economists make assu
CHAPTER THREE STUDY GUIDE:
Absolute Advantage: when comparing the productivity of one person, firm or nation to
that of another.
The producer that requires a smaller quantity of inputs to produce a good is said to have
an absolute advantage in pro ducting
CHAPTER FOUR Economics
Market: a group of buyers and sellers of a particular good or service.
The buyers as a group determine the demand for the product, and the sellers as a
group determine the supply of the product.
Competitive Market: a market in which
CHAPTER FIVE STUDY GUIDE
Elasticity: is a measure of the responsiveness of quantity demanded or quantity
supplied to a change in one of its determinants.
The law of demand states that a fall in the price of a good raises the quantity
Price of El
CHAPTER SIX STUDY GUIDE
In a competitive market free of government regulation, the price of ice creams adjusts to
balance supply and demand: at the equilibrium price, the quantity of ice cream
that buyers want to buy exactly equals the quantity that selle
CHAPTER SEVEN STUDY GUIDE
Welfare Economics: the study of how the allocation of resources affects economic
Willingness to Pay: the maximum amount that a buyer will pay for a good.
Consumer Surplus:the amount a buyer is willing to pay for a goo
Why is the long run can monopoly get a profit?
2.) whats the equation for economic profits?
3.)whats the total revenue equation?
4.) whats the profit equation?
5.) what causes externalities?
6.)whats are the three characteristics of a perfectly compet
What is economics and why do we study economics?
Economics its he study of how people allocate their limited
resources to satisfy their unlimited wants. We study Economics because of scarcity
which refers to the limited nature of societ