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Questions and Answers
What is the substitution effect?
What is the law of demand?
What is the income effect?
What is the difference between quantity demanded and demand?
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What is the law of supply?
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What happens when there is a shortage in a market?
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What happens when there is a surplus in a market?
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What is consumer surplus?
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What is producer surplus?
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What happens to total welfare at equilibrium?
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If Ex,y is positive, what can be inferred about the goods X and Y?
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What is the formula for cross-price elasticity of demand?
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If Ex,y is negative, what can be inferred about the goods X and Y?
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What is the interpretation of a high cross-price elasticity of demand?
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What happens to the demand for good X if the price of good Y increases and Ex,y is positive?
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What happens to the demand for good X if the price of good Y decreases and Ex,y is positive?
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What is the relationship between cross-price elasticity of demand and the concept of substitutes?
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What is the relationship between cross-price elasticity of demand and the concept of complements?
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What is an example of two goods with a high cross-price elasticity of demand?
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What is an example of two goods with a low cross-price elasticity of demand?
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What is the term for a group of firms that formally agree not to compete with each other?
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What is the term for the measure of what the next unit of labor brings to the firm?
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In a perfectly competitive labor market, what is the condition for profit-maximizing resource employment?
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What is the term for the increase in demand for an input due to an increase in demand for the good produced by that input?
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What is the term for the rule that describes how producers minimize cost by finding the optimal combination of inputs?
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What happens to the demand for labor when the price of automated machinery decreases?
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What is the term for the constraint that producers face when trying to minimize cost?
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What is the condition for the least-cost hiring of multiple inputs?
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What is the term for the graphical representation of the possible combinations of two inputs that can be used to produce a given level of output?
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What is the term for the change in the quantity demanded of an input due to a change in the price of a substitute input?
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