AP Macroeconomics: Section 2 Questions With Marking Scheme
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AP Macroeconomics: Section 2
Institution
AP Macroeconomics: Section 2
AP Macroeconomics: Section 2 Questions With Marking Scheme
2 characteristics of a competitive market - Answer-1. many buyers and sellers
2. identical good or service
/.the supply and demand model - Answer-a model of how a competitive market works
/.5 key elements of the supply and demand ...
2 characteristics of a competitive market - Answer-1. many buyers and sellers
2. identical good or service
/.the supply and demand model - Answer-a model of how a competitive market works
/.5 key elements of the supply and demand model - Answer-1. demand curve
2. supply curve
3. demand and supply curve shifts
4. market equilibrium
5. changes in market equilibrium
/.demand schedule - Answer-shows how much of a good or service consumers will want
to buy at different prices
/.demand curve - Answer-the graphical representation of the demand schedule; shows
how much of a good/service consumers want to buy at a price
/.movement along the demand curve - Answer-a change in the quantity demanded of a
good that is the result of a change in that good's price
/.shift of the demand curve - Answer-a change in the quantity demanded at any given
price represented by the change of the original demand curve to a new position,
denoted by a new demand curve
/.number of demand shifters - Answer-6
/.(shift of the demand curve) changes in the prices of related goods: substitutes -
Answer-a substitute good is a good that can be used in place of another; substitutes are
products that a consumer perceives as similar or comparable
/.(shift of the demand curve) changes in the prices of related goods: complements -
Answer-2 goods are complements if a fall in the price of one good makes people more
willing to buy the second good
/.(shift of the demand curve) changes in income: normal goods - Answer-a normal good
is any good for which demand increases when income increases
/.(shift of the demand curve) changes in income: inferior goods - Answer-an inferior
good is a good whose demand decreases when consumer income rises
, /.(shift of the demand curve) human: changes in tastes - Answer-economists lump
together changes in demand due to fads, beliefs, and cultural shifts under the heading
of changes in tastes or preferences
/.(shift of the demand curve) human: changes in expectations - Answer-expectations of
a future drop in price lead to a decrease in demand today; expectations of a future rise
in price are likely to cause an increase in demand today
/.law of demand - Answer-demand curves slope downwards (inverse); as prices fall,
consumer demand rises
/.6 main factors that shift the demand curve - Answer-- change in the price of related
goods
1. substitutes 2. complements
- change in income
3. normal goods 4. inferior goods
5. change in taste
6. change in expectations
/.market demand curve - Answer-the horizontal sum of the individual demand curves of
all consumers in the market for a good/service
/.supply curve - Answer-shows graphically how much of a good or service people are
willing to sell at any given price; usually slopes upwards
/.law of supply - Answer-other things being equal, the price and quantity supplied of a
good are positively related (as prices rise, the quantity supplied rises)
/.shift of the supply curve - Answer-a result of a change in the quantity supplied at every
price
/.movement along the supply curve - Answer-a result of a change in the price of a
good/service
/.change in the quantity supplied - Answer-when there is a movement along the supply
curve
/.change in supply - Answer-when the supply curve shifts
/.(shift of the supply curve) the cost of inputs - Answer-what is put in, taken in, or
operated on by any process/system
/.(shift of the supply curve) government policies - Answer-activity that supports/provides
active enouragement
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