ECO101H1 Study Guide - Demand Curve, Economic Equilibrium, Economic Surplus

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30 May 2013

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ECO101H1 Full Course Notes

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Knowledge summary: demand is usually downward sloping and supply upward sloping. Summary of questions to be asked: plot the demand/supply of a good: Sum up the individual demand/supply at various prices. Plot the new data as the demand/supply curve: find changes in the equilibrium quantity and price: Locate the original equilibrium point e1" (intersection of original demand and supply curves). Locate the new equilibrium "e2" (intersection of demand and supply after a proposed change). Find the difference between the quantity and price of the two points (e1- e2): find new demand curve after: Tax/subsidy causes a upward/downward shift in the demand by the amount of the tax /subsidy. (note: shift is vertically calculated) Change in price of related goods. Complimentary goods: goods that complement each other. (e. g gasoline and cars) If the price of a complimentary goods rises/falls the demand of the. Substitute goods: goods that may substitute each other. (e. g houses and apartments)

Related Questions

6. The primary difference between a change in supply and a change in the quantity supplied is that: A) a change in quantity supplied is a movement along the supply curve, while a change in supply is a shift in the supply curve. B) both a change in quantity supplied and a change in supply are movements along the supply curve, only in different directions. C) a change in supply is related to the supply curve, while a change in quantity supplied is related to shifts in the demand curve that elicit a change in supply. D) a change in supply is a movement along the supply curve, while a change in quantity supplied is a shift in the supply curve.

The primary difference between a change in supply and a change in the quantity supplied is that:

A) a change in quantity supplied is a movement along the supply curve, while a change in supply is a shift in the supply curve.

B) both a change in quantity supplied and a change in supply are movements along the supply curve, only in different directions.

C) a change in supply is related to the supply curve, while a change in quantity supplied is related to shifts in the demand curve that elicit a change in supply.

D) a change in supply is a movement along the supply curve, while a change in quantity supplied is a shift in the supply curve.

grayspider353

a. An increase in the price of Post Frosted Mini Wheats (a substitute for Kellogg Frosted Mini Wheats) should

shift the Demand curve for Kellogg Frosted Mini Wheats to the right.
shift the Demand curve for Post Frosted Mini Wheats to the left.
cause the Demand curve for Pepsi to shift to the right.
cause no shift in the Demand curve for Kellogg Frosted Mini Wheats.
cause the Demand curve for Kellogg Frosted Mini Wheats to shift to the left.

b. Assuming Demand is downward sloping and Supply is upward sloping (as we usually do), what happens to equilibrium price and quantity of a good when Supply decreases?

P decreases; Q decreases

P increases; Q decreases

P decreases; Q increases

P and Q should not change

P increases; Q increases

c. Suppose frictional unemployment is typically UF = 3.0% and structural unemployment is typically US = 2.0%, then what is the "natural" rate of unemployment, UN?

none of the other options