1
Chapter 13
Questions for Review:
1. There are two models, the sticky-price model and the imperfect information
model. The first model is the sticky-price model. The market imperfect in this
model is that prices in the goods market dont adjust immediatel
1
Chapter 10
Question for review:
1.The Keynesian cross tells us that fiscal policy has a multiplied effect on income.
The reasoning behind this is the consumption function, which tells us that higher
income causes higher consumption. An increase in the g
1. Vertical Supply Curve
Inelastic supply, or vertical supply curve is when a higher price doesnt
result in more production. When there is a nearly vertical supply curve,
even a small increase in demand results in a sharp upward price spike,
and even a sm
1.2
a) y=0.5x
A(0,0)
B(4,2)
Yes this is a linear function, there is a proportional relationship between x and y. If a
constant were added the line would shift in a parallel way either up or down according to
what constant was added.
b) y=0.5x + 6
A(0,6)
B
page:
1
Assignment 1
Chapter 3:
1. When the price lies below its equilibrium value, there is an excess demand, or
shortage. The supply and demand model predicts that because there is excess
demand, dissatisfied buyers are motivated to offer higher prices,
Microeconomics Outline: Exam I, Chapter 2-5
2. Supply and Demand
Demand: Curve, Function, Schedule
Law of Demand
Adding Demand Curves
Supply, Law of Supply, Adding Supply Curves Market Equilibrium
Shifts in Supply, Shifts in Demand
Joint Shifts in S
1
Chapter 1
Questions for Review:
2. Economist use models to understand the world. They build models or their toy
economies to help explain economic variables, such as GDP, inflation and
unemployment. Economic models illustrate, often in mathematical term
1.
a) Qd= 15 A (0,15)
B( 10, 13)
1
P
5
Qs= -1 +
A (0, -1)
B (10, 5)
3
P
5
b) Slope of D curve =
Slope of S curve =
y 2 y 1
x 2x 1
y 2 y 1
x 2x 1
=
=
1315
100
5(1)
100
=+
1
5
3
5
The slope is the change of y over x in an equation. The slope indicates which