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Unit 2 Review Sheet Reg Economy

This document provides a review of key economics concepts including: 1) Definitions of price, quantity, and how price and quantity are determined in America. 2) Explanations of the law of demand and factors that influence demand. 3) Illustrations of demand and supply graphs showing changes in price and quantity. 4) Distinctions between complementary/substitute goods and normal/inferior goods. 5) Descriptions of the law of supply and factors that influence supply. 6) Explanations of equilibrium price and the impacts of price floors and ceilings. 7) A definition of minimum wage and rationale for its existence in America.

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Khoa Le
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177 views5 pages

Unit 2 Review Sheet Reg Economy

This document provides a review of key economics concepts including: 1) Definitions of price, quantity, and how price and quantity are determined in America. 2) Explanations of the law of demand and factors that influence demand. 3) Illustrations of demand and supply graphs showing changes in price and quantity. 4) Distinctions between complementary/substitute goods and normal/inferior goods. 5) Descriptions of the law of supply and factors that influence supply. 6) Explanations of equilibrium price and the impacts of price floors and ceilings. 7) A definition of minimum wage and rationale for its existence in America.

Uploaded by

Khoa Le
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Unit 2 Review Sheet-Economics

This is called a concept review. I use these because I


want everyone to know as much as humanly possible
about each and every concept. The more you do these
the easier they will get.

1. Define price
An exchange for an amount of currency for specific goods or services.
2. Define quantity
The total amount of goods that the producers have in stocks.
3. In America who determines the price and quantity of goods?
Individuals known as producers.
4. Draw the law of demand

5. List and explain the three reasons the law of demand exist
- Consumers will want to buy goods with low prices due to the desire to have
finnicial stability.
- Consumers would not to buy goods with high prices due to the desire to have
finnicial stability.
- Consumers are important to the economy as a group of individuals based on
their desires and needs because this makes fair relationship between consumers
and producers which leads to a stable economy.
6. Draw and correctly label a demand graph

Price

Quantity
7. Draw a demand graph indicating and increase in demand

8. Draw a demand graph indicating and decrease in demand

9. What is the difference between a complimentary and substitute good?


Complementary are goods that are specificly purchased together from another different
types of good. Subtitute are goods that fulfill the same use as another types of good.
10. Define an inferior good
Inferior goods is when demand goes down as income rise and the opposite happens
when demand goes up and income goes down.
11. Define a luxury good
Luxury goods is when demand goes up higher than the income does.
12. List and explain each of the determinant of demand
- Demand
- Income
- Population
- Demand for related products
- Consumer tastes
- Expectations about the future
- Supply
- Production costs
- Opportunity costs
- Competition
- Technology
- Expectations about the future
13. Give an example of each determinant
- Demand
- Since the minimum wages of a group of friends increased, they went out
to spend more of their cash on casinos.
- Supply
- There was a new fast food place that offers better food at lower price
than the other fast food place.
14. Draw the law of supply

15. Explain Increasing, diminishing, and negative marginal return


- Increasing: adding additional units of labor will start to increase in productivity.
- Diminishing: adding additional units of labor will start to decrease in productivity.
- Negative: the total output result in a decrease in comparision that was initially
invested on.
16. Draw a supply graph fully labeled

Price

Quantity
17. Draw a supply graph indicating a decrease in demand

18. Draw a supply graph indicating and increase in demand

19. List and explain each determinant of supply


- Production costs: the cost for producing the goods.
- Opportunity costs: potential investments that could have been put to use
instead.
- Competition: facing against other goods that one does not own that have similar
use to one's own goods.
- Technology: the method used to produce goods.
- Expectations about the future: the prediction of what one's future could be.
20. Give an example of each determinant
- Production costs: it costs to $100K each month to run the factory producing silk.
- Opportunity costs: there is a chart that shows opportunity costs between buying
Gameboy and Nintendo DS.
- Competition: There is a competition between fast foods to see which one can
make the best profit from the same targeted consumers they share.
- Technology: a new techinque to maximaze shaping the dough faster by hand by
50%.
- Expectations about the future: the owner of a shop speculates to make 500%
more cash by the end of the year if he keeps up selling the right stocks.
21. Define and explain what a subsidy is
Currency given to producers by the government for the price to remain stable.
22. Explain elasticity
The responsiveness of consumers and producers to price changes.
23. Explain inelasticity
The inresponsiveness of consumers and producers to price changes.
24. Define equilibrium
The intersection where the supply and demand curve meets, indication where both
consumers and producers reach the point of equal gains from each other.
25. Draw a supply and demand graph clearly indicating the equilibrium

26. Define a price floor


The minimum prices sellers are allowed to charge.
27. Define a price ceiling
The maximum prices sellers are allowed to charge.
28. Draw a graph indicating a price floor

29. Draw a graph indicating a price ceiling


30. Explain what a minimum wage is and why we have it here in America
To force employers to pay their employees so there is a reason to become an employee
for the money and a reason for employers to have employees.

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