Download Supply Demand AP review

AP Supply/Demand Review
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Law of Demand:
o Determinants of demand
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Law of Supply
o Determinants of demand
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Change in demand/supply vs. change in quantity demanded/quantity supplied
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Demand increase, eq. Price _______ eq. Quantity ________
Demand decrease, eq. Price _______ eq. Quantity ________
Supply increase, eq. Price _________ eq. Quantity ________
Supply decrease, eq. Price _________ eq. Quantity _________

Price ceiling
Causes a _______

Graph
Price floor
Causes a _______
Graph

Law of diminishing marginal utility
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Income effect
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Substitution effect
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Price elasticity of demand—
% change in ________
% change in ________
o Elastic if ____ 1
o Determinants
Inelastic if ____ 1 Unit elastic if ___ 1
o More elastic at _________ prices

Total revenue test:
o elastic demand if price and TR inversely related
o inelastic demand if price and TR directly related
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Cross elasticity of demand
% change in _________ of good A
% change in __________ of good B
Substitutes if ______ 0
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Complements if ______ 0
Income elasticity of demand
% change in _______
% change in _______
Superior (normal) if _____ 0
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Price elasticity of supply
% change in ______
% change in ______
Main determinant: _________
o Market period
o Short run
o Long run
Consumer surplus
Producer surplus
Inferior if _____ 0