Chapters 4-7 Test Review

M/C-inferior goods, unitary elasticity, total revenue, demand schedule, elasticity of demand, operating costs, quantity supplies, marginal cost, elasticity of supply, variable costs, supply curve and elasticity, price ceiling, equilibrium, rationing, equilibrium, search costs, shortage and disequilibrium, supply, government monopoly, non-price competition, monopolistic competition, perfect competition, deregulation, start-up costs, monopolistic competition, barriers to entry, perfect competition

Matching-subsidy, supply schedule, supply curve, elasticity of supply, excise tax, law of supply, variable cost, increasing marginal returns, diminishing marginal returns, marginal revenue, marginal product of labor, marginal cost, market supply schedule.

Increasing marginal returns, diminishing marginal returns, marginal revenue, marginal product of labor, marginal cost, supply schedule, quantity supplied, market supply curve, total cost, law of supply, variable, elasticity of supply, regulation.

-Give an example of how a consumer’s expectation that price will go down in the future can affect his or her desire to buy something today. Does this always have the same effect on present buying patterns?
-How does the budget percentage that a person spends on a certain good affect the elasticity of demand for that good? Give a specific example.
-What is the difference between a change in quantity demanded and a shift in the demand curve?
-Give an example of a good or service that may change in elasticity over time rather than immediately, and discuss why this happens.
-What role can advertising play in a shift in demand? Give a specific example.
-How is elasticity of supply related to elasticity of demand?
-What causes supply to grow as price rises?
-Why doesn’t the supply increase when a new owner buys an existing facility that is producing a good, since there is a new supplier?
-What are the major advantages of a distribution system based on price?
-Give an example of the way that the Internet has reduced start-up costs for some businesses.