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After reading this chapter, you should be able to:
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Discuss “the law of demand” by word, table, and graph. (Section
3.1)
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List the variables that shift the demand curve and explain why they
do so; and explain the income and substitution effects. (Section
3.1)
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Explain the difference between “demand” and “quantity demanded,”
“increase (or decrease) in demand” and “increase (or decrease) in
quantity demanded,” “shift of the demand curve” and “movement along
the demand curve.” (Section 3.1)
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Discuss “the law of supply” by word, table, and graph. (Section
3.2)
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List the variables that shift the supply curve and explain why they
do so. (Section 3.2)
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Explain the difference between “supply” and “quantity supplied,”
“increase (or decrease) in supply” and “increase (or decrease) in
quantity supplied,” “shift of the supply curve” and “movement along
the supply curve.” (Section 3.2)
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Explain how we can use the concepts of market supply and market
demand to determine equilibrium price and equilibrium quantity.
(Section 3.3)
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Define and explain the concepts of surplus, and shortage in the
context of market supply and market demand. (Section 3.3)
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Specify how demand and supply shifts cause market equilibriums to
change and how simultaneous changes to supply and demand cause
market equilibriums to change. (Section 3.3)
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Discuss how vouchers use competition to improve the quality of
schooling. (Section 3.4)
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