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AP Economics
D Hoffman
FOCUS QUESTIONS
CHAPTERs 4 & 6
Chapter 4 - pp 63-83
1. Which group determines the demand for a product: buyers or sellers?
2. What is a market?
3. In a competitive market, why can’t each seller decide on his or her own what price to charge?
4. Thus, in competitive markets, how does the price of a good get determined?
5. What does quantity demanded represent?
6. What is the law of demand?
7. What is the difference between a schedule and a curve?
8. What is a “market demand” (as opposed to an “individual demand”)?
9. The demand curve or schedule shows the relationship between what two variables?
10. When there is an increase or decrease in demand, what happens to the curve? (i.e., what does the
curve do?)
11. What are the 5 main variables that will shift the demand curve? (HINT: Each one is explained on
pp 68-69 – look at the headings!)
12. Skip this one, I’ll cover it in class. When does the entire demand curve shift as opposed to a
shift along the existing curve? (The difference between a change in demand and a change in
quantity demanded.)
13. Define:
a. a normal good
b. an inferior good
c. a substitute good
d. a complementary good
e. If income decreases and demand decreases, is the good normal or inferior?
14. Give two examples NOT used in the text for each:
a. a normal good
b. an inferior good
c. a substitute good
d. a complementary good
15. Draw two graphs…
a. one depicting an increase in demand
b. one depicting a decrease in demand
16. Define “quantity supplied”.
17. What is the “law of supply”?
18. What is the difference between an individual supply curve and a market supply curve?
19. (This may be a hard one) Any change that raises or lowers the quantity supplied at every price is
called a: ____________________________.
20. Page 74 describes four main variables that can change the supply curve. List them.
21. What is the difference between a change in supply and a change in quantity supplied?
22. Draw two graphs…
a. one depicting an increase in supply
b. one depicting a decrease in supply
23. The point at which supply curves and demand curves intersect is known
as:_____________________ .
24. Define equilibrium price.
25. Skip this one; I’ll answer it. What occurs (in terms of supply and demand at equilibrium and
why is it sometimes called the “market clearing” price)?
26. In relation to the equilibrium point…
a. Where is price located when there is a surplus?
b. Where is price located when there is a shortage?
27. What is the law of supply and demand?
28. What happens to price and quantity when…
a) Supply increases?
b) Supply decreases?
c) Demand increases?
d) Demand decreases?
e) Both S & D increase?
f) Both S & D decrease?
g) Supply increases & Demand decreases?
h) Supply decreases & demand increases?
Chapter 6 Study Questions
Supply, Demand & Government Policies
Pp 113 – 123 ONLY
1. Page 113 names two specific examples of price controls. What are they?
2. What is a….
a. price ceiling?
b. price floor?
3. Is the minimum wage law an example of a price ceiling or price floor?
4. Is rent control an example of a price ceiling or price floor?
5. In relation to equilibrium price, where (above or below equilibrium) is a…..
a. price ceiling located?
b. price floor located?
6. Does a price ceiling cause a shortage or surplus?
7. Read the Case Study: “Lines At The Gas Pump” on p. 116. According to economists, what
caused a shortage of gasoline in 1973? (It may be hard to put into your own words – try it.)
8. Read the Case Study: “Rent Control In the Short Run & Long Run” (p 117).
a. Why does a government impose rent control laws in certain areas?
b. What is ONE negative outcome (or side-effect) of imposing rent control laws?
9. SKIP “How Price Floors Affect Market Outcome” (pp 118-119).
10. Read the Case Study: “The Minimum Wage” (p 120-123). Stop at “Evaluating Price
Controls.”
a. What specific group of workers is most affected by minimum wage laws?
b. Are you personally in favor of, or against minimum wage laws? WHY?????