Test#1 Study Guide

The test will consist of 20 questions each worth 5 points. You will have one attempt to take the test. Once the clock starts, you must finish the test. You will be unable to save and continue later. The test will open on Thursday and close on Sunday by 11:59 pm. 

 The test covers Modules 8,9,10,11,12, and 20

The following are a list of topics to study for the exam:

• Substitution vs. Income effect
• The midpoint method
• The law of demand and the price elasticity of demand formula
• The law of supply and the price elasticity of supply formula 
• Interpreting the price elasticity of demand and supply 
• How elasticity affects total revenue.
• The price effect vs. the sales effect.
• Factors that determine the price elasticity of demand and supply 
• Perfectly inelastic demand
• The potential seller's cost 
• Normal vs. inferior goods.
• The income elasticity of demand.
• Complement vs. Substitute goods.
• The cross-price elasticity of demand.
• Consumer surplus vs. producer surplus.
• How to calculate both consumer and producer surplus.
• Total surplus.
• Deadweight loss 
• Market equilibrium and total surplus.
• Utility and how it is measured.
• Principle of diminishing marginal utility.
• A budget line