Unit 2 Study Guide

Demand, Supply, Market Price System

The Following terms/definitions/concepts appear on the Unit 2 test

1. Change in demand

2. Change in quantity demanded

3. Marginal utility

4. Income Effect

5. Substitution Effect

6. Demand Elasticity (Don’t forget Unit Elastic)

7. The Law of Demand

8. Non-Price Determinants of Demand

9. Demand Elasticity

a. How to calculate and determine demand elasticity?

b. why businesses are concerned with elasticity

10. Diminishing marginal utility

11. Law of Supply

12. Non-Price Factors Determining Supply

13. Elasticity of Supply

a. How to calculate and determine supply elasticity?

14. The definition of and the way to calculate:

a. Marginal Product

b. Marginal Revenue

c. Total Revenue

d. Marginal Cost

e. Profit

f. Total Cost

g. Fixed Costs

h. Variable Costs

15. Diminishing returns

16. Specialization

17. Profit Maximizing Output

18. Equilibrium Price

19. Surplus (definition, way to fix it, graphic representation)

20. Shortage (definition, way to fix it, graphic representation)

21. Price Ceilings

22. Price Floors

23. Supply Production Chart