ECON 2000 Philip Marx Questions &
Answers
Supply and demand - ANSWERSWhen the price of a good rises, the quantity supplied
of the good rises (other things equal)
Laws of Demand - ANSWERSAs a price of a good increases (P), quantity demanded
(Qd) decreases
Laws of Supply - ANSWERSAs price of a good/service increases (S), the quantity
supplied (Qs) increases
Inferior goods - ANSWERSGoods for which demand tends to fall when income rises.
(shifts left)
normal goods (superior goods) - ANSWERSGoods for which demand goes up when
income is higher and for which demand goes down when income is lower. (shifts right)
Substitutes - ANSWERStwo goods for which an increase in the price of one leads to an
increase in the demand for the other
Complements - ANSWERStwo goods for which an increase in the price of one leads to
a decrease in the demand for the other
Competitive market - ANSWERSa market in which there are many buyers and many
sellers so that each has a tiny impact on the market price
Equilibrium - ANSWERSthe price at which quantity demanded equals quantity supplied
Shortage - ANSWERSA situation in which quantity demanded is greater than quantity
supplied
