ASSIGNMENT 2
Chapter 10
Question 2
The theory of liquidity preference explains how the supply and demand for real money balance
determined the interest rate. The theory states that there is a fixed su
1
Chapter 13
Questions for Review:
1. There are two models, the stickyprice model and the imperfect information
model. The first model is the stickyprice model. The market imperfect in this
model is
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
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 dema
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 accor
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, di
Microeconomics Outline: Exam I, Chapter 25
2. Supply and Demand
Demand: Curve, Function, Schedule
Law of Demand
Adding Demand Curves
Supply, Law of Supply, Adding Supply Curves Market Equilibrium
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.
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 chang
Max U: U= 5 x+6 y +1.2 xy1.5 x 20.6 y 2 /
13 x+6 y =100
5 x +6 y +1.2 xy1.5 x 20.6 y 2 [ 13 x+ 6 y100 ]
= 5+1.2 y3 x13 =0= 5+1.2 y3 x=13
x
=6+1.2 x1.2 y6 =0= 6+1.2 x1.2 y=6
y
=13 x+6 y 100=0= 13 x+
Chapter 11
Decision Time Frames
What do General Motors, PennPower, and Campus Sweaters, have in common?
Like every firm,
They must decide how much to produce
How many people to employ
The firm makes m
Micro Chapter 12
A corn farmer must make many decisions, but figuring out the price to charge for his corn is not
one of them.
Corn farmers and the producers of most cropsamong them wheat, soybean, ca
the price elasticity of demand is calculated by using the formula
Calculating price elasticity of demand
The price elasticity of demand is calculated by using the formula
percentage change in quantity
Consumption possibilities
Household consumption choices are constrained by its income and the prices and services
available
The budget line describes the limits to the household consumption choice
Bud
Consumption Choices
The choices you make as a buyer of goods and services is influenced by many factors, which
economists summarize as:

Consumption possibilities
Preferences
Consumption possibilitie
Consumption Choices
The choices you make as a buyer of goods and services is influenced by many factors, which
economists summarize as:

Consumption possibilities
Preferences
Consumption possibilitie