Test#1 Study Guide

Note: The test will consist of 20 True/False questions each worth 5 points.

Note: The test covers Modules 46, 47, 48, 49, 50, and 51.

Note: The test opens on Saturday, July 11th at 8 am, and closes on Sunday, July 12th at 11:59 pm. 

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

•   Substitution vs. Income effect
• The midpoint method
• The law of demand.
• The law of supply.
• The price elasticity of supply.
• The price elasticity of demand.
• Interpreting the price elasticity of demand.
• How elasticity affects total revenue.
• The price effect vs. the sales effect.
• Factors that determine the price elasticity of demand.
• Normal vs. inferior goods.
• The income elasticity of demand.
• Complement vs. Substitute goods.
• The cross-price elasticity of demand.
• Factors that determine the price elasticity of supply.
• Consumer surplus vs. producer surplus.
• Potential seller's cost.
• 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.