Download ECO 2023 Principles of Microeconomics Chapter 3 Supply, Demand

ECO 2023 Principles of Microeconomics
Chapter 3 Supply, Demand, and the Market Process
7 Learning Goals:
#1 -
Investigate and describe consumer behavior.
Chapter heading: Consumer Choice and the Law of Demand
Key terms:
Law of demand- ________________________________________________________________
_____________________________________________________________________________
Substitutes- ___________________________________________________________________
When the price of a good increases, why do you usually buy less of it? _____________________
_____________________________________________________________________________
_____________________________________________________________________________
#2 -
Distinguish a change in demand from a change in quantity demanded.
Chapter heading: Changes in Demand Versus Changes in Quantity Demanded
Key term:
Complements- _________________________________________________________________
What is the difference between demand and quantity demanded? _________________________
_____________________________________________________________________________
Draw two separate demand curves. For one, illustrate a change in demand. For the other,
illustrate a change in quantity demanded.
Factors that cause a change in demand:
1. ___________________________________________________________
2. ___________________________________________________________
3. ___________________________________________________________
4. ___________________________________________________________
5. ___________________________________________________________
6. ___________________________________________________________
Identify two goods that you consider to be substitutes: (A)____________ and (B)____________
Complete the following sentences by inserting your substitute names and circling the correct
options:
If consumers’ preferences changed so that they wanted more (A)______________, the
(demand/quantity demanded) for (A)_______________ would (rise/fall), causing the demand
curve to shift (right/left) and they would purchase (more/less) (A)____________. The
(demand/quantity demanded) for (B)____________ would (rise/fall), causing the demand curve
to shift (right/left).
If consumers’ preferences changed so that they wanted less (A)_______________, the
(demand/quantity demanded) for (A)_______________ would (rise/fall), causing the demand
curve to shift (right/left) and they would purchase (more/less) (A)____________. The
(demand/quantity demanded) for (B)____________ would (rise/fall), causing the demand curve
to shift (right/left).
If the price of (A)_________ rose, the (demand/quantity demanded) of (A)____________
would (rise/fall) and consumers would purchase (more/less) (A)_____________. The
(demand/quantity demanded) for (B)____________ would (rise/fall), causing the demand curve
to shift (right/left).
If the price of (A)_________ fell, the (demand/quantity demanded) of (A)_____________
would (rise/fall) and consumers would purchase (more/less) (A)_____________. The
(demand/quantity demanded) for (B)____________ would (rise/fall), causing the demand curve
to shift (right/left).
Identify two goods that you consider to be complements: (A)___________ and (B)___________
Complete the following sentences by inserting your complement names and circling the correct
options:
If consumers’ preferences changed so that they wanted more (A)______________, the
(demand/quantity demanded) for (A)______________ would (rise/fall), causing the demand
curve to shift (right/left) and they would purchase (more/less) (A)______________. The
(demand/quantity demanded) for (B)_____________ would (rise/fall), causing the demand curve
to shift (right/left).
If consumers’ preferences changed so that they wanted less (A)______________, the
(demand/quantity demanded) for (A)______________ would (rise/fall), causing the demand
curve to shift (right/left) and they would purchase (more/less) (A)______________. The
(demand/quantity demanded) for (B)_____________ would (rise/fall), causing the demand curve
to shift (right/left).
If the price of (A)_____________ rose, the (demand/quantity demanded) of (A)_____________
would (rise/fall) and consumers would purchase (more/less) (A)_____________. The
(demand/quantity demanded) for (B)_____________ would (rise/fall), causing the demand curve
to shift (right/left).
If the price of (A)_____________ fell, the (demand/quantity demanded) of (A)_____________
would (rise/fall) and consumers would purchase (more/less) (A)_____________. The
(demand/quantity demanded) for (B)_____________ would (rise/fall), causing the demand curve
to shift (right/left).
#3 -
Investigate and describe firm behavior.
Chapter heading: Producer Choice and the Law of Supply
Key terms:
Opportunity cost of production- ___________________________________________________
Profit- _______________________________________________________________________
Loss- ________________________________________________________________________
Law of Supply- ________________________________________________________________
_____________________________________________________________________________
What is the role of profits and losses in a market economy? ______________________________
______________________________________________________________________________
______________________________________________________________________________
When the price of a good increases, why is a firm usually willing to make more of it?
______________________________________________________________________________
______________________________________________________________________________
#4 -
Distinguish a change in supply from a change in quantity supplied.
Chapter heading: Changes in Supply Versus Changes in Quantity Supplied
What is the difference between supply and quantity supplied? ____________________________
_____________________________________________________________________________
Draw two separate supply curves. For one, illustrate a change in supply. For the other, illustrate
a change in quantity supplied.
Factors that cause a change in supply:
1. ___________________________________________________________
2. ___________________________________________________________
3. ___________________________________________________________
4. ___________________________________________________________
#5 -
Build a market model and illustrate how equilibrium is reached.
Chapter heading: How Market Prices are Determined: Supply and Demand Interact
Key terms:
Market- _____________________________________________________________________
Equilibrium- _________________________________________________________________
Economic efficiency- ___________________________________________________________
Draw the market supply and demand model. Identify three prices: one that would produce a
surplus, one that would produce a shortage, and one that would result in market equilibrium.
#6 -
Demonstrate how markets respond to changes in demand and supply.
Chapter heading: How Markets Respond to Changes in Demand and Supply
Draw the market supply and demand model. Illustrate how each of the following changes would
change equilibrium price and quantity:
1. an increase in demand
2. a decrease in demand
3. an increase in supply
4. a decrease in supply
Draw the market supply and demand model. Illustrate how each of the following simultaneous
changes would change equilibrium price and quantity:
1. an increase in demand and an increase in supply
2. a decrease in demand and a decrease in supply
3. an increase in demand and a decrease in supply
4. a decrease in demand and an increase in supply
#7 -
Recognize how prices and the invisible hand principle create market order.
Chapter heading: How Markets Respond to Changes in Demand and Supply (sections “Invisible
Hand Principle” and “Prices and Market Order”)
Provide an example of the invisible hand working in a market. ___________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
Functions of market prices:
1. ___________________________________________________________
2. ___________________________________________________________
3. ___________________________________________________________