This is JEOPARDY Supply and Demand Supply and Demand Mr. Booth/Alex Trebek Mr. Booth/Alex Trebek

Categories Def. of Demand Def. of Supply Elastic or Inelastic Random What If? Review Questions

Final Jeopardy

QD would decrease from 10 to 5. You have $50 and want to buy some CD’s. If prices of CD’s rose from $5 each to $10, how would your quantity demanded of CD’s change?

What is Utility? Benefit or satisfaction gained from using a good or service

What is the Income Effect? You buy more if the price is lower and buy less if the price is higher

What are Substitutions or the Substitution Effect? When you react to a change in price and buy a similar product Ex. Going to a movie instead of renting a DVD from Blockbuster

What are Inferior Goods? Demand for these goods fall as income rises. Example: Discounted clothing

When the use of a product increases the use of another product. Example: Cereal and Milk What are Complements?

The change in total product by adding more workers What is Marginal Product?

Costs that depend on the level of output. Example: Wages for workers What are Variable Costs?

Tax on items the government is interested in discouraging. Ex: Tax on Cigarettes What are Excise Taxes?

This controls businesses behavior. Ex. Government _____the prescription drug industry so people don’t die from a dangerous drug What is Regulation?

Example: Cost that a business must pay regardless of output. Example: A business paying its lease or even utilities. What are Fixed Costs?

A good with a lot of substitutes. What is Elastic?

Daily Double “Don’t Choke!”

What is Elastic? A luxury item like a Ferrari

Insulin What is Inelastic?

Sweet rims for an Escalade What is Elastic?

Ice Cream What is Elastic (many substitutes if prices goes up)?

A software company invest in a set of fast, new computers that allow employees to test their new programs easily and quickly. What factor is this and how will it affect supply? Want is Technology/Increase/Shift Right?

A farmer is deciding how much tobacco and how much corn to grow on the farm. Congress recently cut the subsidies that it pays farmers to raise tobacco. What factor is this and how will it affect supply of both crops? A. Government Action/tobacco will decrease in supply and supply of corn will increase and move to the right.

Situation: Substitutes. The price goes up for a movie. What happens to the demand of renting a DVD (Substitute). It goes _____ What is Up ?

A tool-making company hires several workers who got degrees from a technical school, where they learned manufacturing techniques. Which factor is this and how will it affect supply? A. What is productivity/ Supply will increase and shift the curve to the right?

Daily Double “Don’t Choke!”

You own a company that makes wire. The price of copper has recently gone up. What characteristic is it and what happens to supply? A. Characteristic is input costs and supply will decrease and go to the left.

Money made from producting an additional unit of output. What is Marginal Revenue?

This law states that the marginal benefit of using each additional unit of a product during a given period will decline What the Law of Diminishing Marginal Utility?

Goods that consumers demand more of when their incomes rise What are Normal Goods?

When a worker focuses on a particular aspect of production What is Specialization?

A government payment that partially covers the cost of an economic activity. Example: Government made payments to double the supply of ethanol (gasoline substitute) What is a Subsidy?

A. Supply is above the equilibrium price = Surplus Supply is below the equilibrium price = Shortage How are surplus and shortage related to equilibrium price?

Inelastic When consumers have few choices, will the demand be elastic or inelastic?

A. They will buy the substitute because it’s cheaper. If the price of a substitute drops, will they buy the substitute or the original good?

A. An increase in demand for coffee An increase in demand for one complement will have what effect on the other complementary good? Example: An increase in demand for sugar will have what effect on coffee?

Does supply have an inverse or direct relationship? A. A direct relationship. If demand goes up, supply goes up because producers think they can make more money with more product sold.