Reference no: EM132216869

A. Economists think in terms of key concepts.

1. List the concepts that economists think in terms of.

2. Define opportunity cost.

3. Use the concept of opportunity cost to explain why some things are not done.

4. Explain why economists consider costs and benefits, instead of only benefits.

5. Give an example from your life where you have considered both costs and benefits.

6. Explain why it is important to consider unintended effects.

B. Movements along a demand curve are called changes in quantity demanded, while shifts to new demand curves are called changes in demand.

1. Explain the differences between a change in quantity demanded and a change in demand.

2. Define the following terms:

a. Normal good

b. Inferior good

c. Substitute

d. Complement

3. Graphically illustrate the difference between an increase in quantity demanded and an increase in demand.

4. Graphically illustrate the difference between a decrease in quantity demanded and a decrease in demand.

5. List the changes that would shift the demand curve rightward.

6. List the changes that would shift the demand curve leftward.

C. A change in a factor of demand or a factor of supply (or both) will change the point of market equilibrium in a predictable way. Explain what will happen to equilibrium price and equilibrium quantity in the following cases:

a. Demand rises and supply is constant.

b. Demand falls and supply is constant.

c. Demand is constant and supply rises.

d. Demand is constant and supply falls.

e. Demand rises by more than supply rises.

f. Demand rises by the same amount that supply rises.

g. Demand rises by less than supply rises.

h. Demand rises by more than supply falls.

i. Demand rises by the same amount that supply falls.

j. Demand rises by less than supply falls.

k. Demand falls by more than supply rises.

l. Demand falls by the same amount that supply rises.

m. Demand falls by less than supply rises.

n. Demand falls by more than supply falls.

o. Demand falls by the same amount that supply falls.

p. Demand falls by less than supply falls.