Chapter+3_4

=Chapter 3: Demand=

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Can you:
 * Draw a Demand curve?
 * Describe the meaning of the Law of Demand (Price Effect)?
 * Desctibe what a change in demand means? Can you draw a shift in a demand curve (increase or decrease)?
 * What are examples of items that are either elastic or inelastic in their demand?
 * Identify examples of demand in newspaper articles?

=Chapter 4: Supply=

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Can you:
 * Draw a Supply Curve?
 * Describe the meaning of the Law of Supply (Price Effect)?
 * Desctibe what a change in supply means? Can you draw a shift in a supply curve (increase or decrease)?
 * What are examples of items that are either elastic or inelastic in their supply?
 * Identify examples of supply in newspaper articles?

=Chapter 3 Extra Credit: //(To get full credit, answer each question correctly, in 4-5 sentences)//=
 * 1) The price of water increases dramatically. Do you think the higher price will reduce the quantity of water that households use? __Explain__ your reasoning.
 * 2) Imagine that you sell TVs. Explain how the principle of diminishing personal value affects your ability to sell your customers a second or third TV set.
 * 3) Over the years government and private insurance have reduced the price that people pay out of their pockets when buying medical services. Today, people directly pay out of their pockets less than 20 cents for every dollar's worth of medical services they buy. Do you think this change has affected the amount of medical services people buy? Use your understanding of demand to explain your answer.

=Chapter 4 Extra Credit:=


 * 1) A higher price of peanut butter increases the amount produced, but it does not increase the supply of peanut butter. Explain how this is possible.
 * 2) Natural gas prices have fallen since the 1980s, yet producers are selling more gas. Does this contradict the price effect? Why or why not?
 * 3) In 1982 and 1991 incomes leveled off and job opportunities were scarce. At both times the number of people deciding to go to college increased. Why might difficult times cause the number of students at colleges to increase? (Hint: What happens to the opportunity cost of going to college during a recession?)