2. Eco 101 Principles of Microeconomics

3. 100 200 400 300 400 Intro to Econ Supply & Demand Elasticity Market Failure 300 200 400 200 100 500 100

4. Row 1, Col 1 With limited resources and unlimited wants, this is the central economic problem. What is scarcity?

5. 1,2 This law tells us that price is inversely related to quantity, holding all else constant. What is the law of demand?

6. 1,3 Since the demand curve always slopes down, we expect elasticity to have this property. What is be < 0?

7. 1,4 Pollution is a prime example of this type of market failure. What is a negative externality or external cost?

8. 2,1 This refers to the next best option not chosen. What is opportunity cost?

9. 2,2 An increase in income will actually decrease the demand for these types of goods. What are inferiors goods?

10. 2,3 When demand elasticity is -5, and 10% price increase causes this change in quantity demanded. What is a DECLINE of 50%?

11. 2,4 A good has this property when you cannot prevent non-payers from consuming it. What is nonexclusivity?

12. 3,1 The production possibilities curve takes this shape due to resources being unequally suiting to different uses. What is concave?

13. 3,2 Peanut butter and jelly are prime examples of these types of goods. What are complements?

14. 3,3 We expect gasoline demand to be inelastic for this reason. What is lack of substitutes? or What is it’s a necessity?

15. 3,4 This problem occurs with public goods when people attempt to enjoy the benefits of such goods without paying for them. What is the free rider problem?

16. 4,1 “Taxes are too high,” is an example of this type of statement. What is a normative statement?

17. 4,2 When the price of Coke rises, we expect the demand for Pepsi to do this. What is shift right?

18. 4,3 A perfectly inelastic supply curve takes this shape. What is a vertical line?

19. 4,4 Positive externalities are a market failure that results in this. What is underproduction of the good or service?

20. 5,1 This factor of production refers to all types of natural resources. What is land?

21. 5,2 With an increase in both supply and demand, we know this must increase in equilibrium. What is quantity?

22. 5,3 When a good is not easily stored, its supply has this characteristic. What is inelastic?

23. 5,4 Flood control is considered a public good, because it has these two properties. What is nonexclusivity and nonrivalry?