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Econ 102: Microeconomics Final Exam Review: Dr. Kagundu, Penn State University,
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Econ 102: Microeconomics Final Exam Review: Dr. Kagundu, Penn State University,
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Econ 102: Microeconomics Final ExamReview: Dr. Kagundu, Penn State
University,
Effects of An increase in demand with a stable supply -
Correct Answer ✅ EQ Price Increases and EQ Quantity
Increases
Effects of A decrease in demand with a stable supply -
Correct Answer ✅ EQ Price Decreases and EQ Quantity
Decreases
Effects of an increase in supply with a stable demand -
Correct Answer ✅ EQ Price Decreases and EQ Quantity
Increases
Effects of an decrease in supply with a stable demand -
Correct Answer ✅ EQ Price Increases ad EQ Quantity
Decreases
Effects when supply increases and demand increases -
Correct Answer ✅ EQ Quantity Increases
,Econ 102: Microeconomics Final Exam
Review: Dr. Kagundu, Penn State
University,
Effects when supply decreases and demand decreases -
Correct Answer ✅ EQ Quantity Decreases
Effects when demand decreases and supply increases -
Correct Answer ✅ EQ Price Decreases
Effects when demand increases and supply decreases -
Correct Answer ✅ EQ Price Increases
The effect when demand increases in a market - Correct
Answer ✅ A shortage develops and price will increase
Rationing Functions of Prices - Correct Answer ✅ The
decision of buyers and sellers that creates the equilibrium.
Prices are indicators of relative scarcity and ration goods to
those who will pay the most
Non-price rationing:
,Econ 102: Microeconomics Final Exam
Review: Dr. Kagundu, Penn State
University,
(1)Rationing by waiting
(2)Rationing by random assignment/ coupon
Government Imposed Price Controls - Correct Answer ✅
Price Ceiling and Price Floor
Price Ceiling - Correct Answer ✅ The maximum price
sellers are allowed to charge for a good or service
Who benefits from Price Ceilings? - Correct Answer ✅
Buyers
When Price Ceiling is effective - Correct Answer ✅ PC is
only effective if set below the market price
Does Price Floor result in surplus of excess? - Correct
Answer ✅ Surplus
, Econ 102: Microeconomics Final Exam
Review: Dr. Kagundu, Penn State
University,
Price Floor - Correct Answer ✅ The minimum price buyers
are required to pay for a good or service
Who benefits from Price Floors? - Correct Answer ✅ Sellers
When Price Floor is effective? - Correct Answer ✅
Rent Control - Correct Answer ✅ When Government places
a Price Ceiling on rents. This interferes with the housing
market's ability to ration housing.
Causes of Demand Shift - Correct Answer ✅ 1. Income
(Normal vs. Inferior Goods)
2. Tastes and Preferences
3. Prices of related goods (Complements vs. Substitutes)
4. Number of buyers
5. Expectations
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