Part I – Short Answer Thirty points total, ten points each.  Answer three only.   Please answer the questions in three boxes below.  Suppose the government in response to angry voters during the summer imposes a price ceiling on cold beverages of $1.00 per can.  However, the market price is $2.00 per can.  What would you expect the outcome to be?  What is the circular flow model?  What key concept does this model illustrate? What is a substitute and complement? Provide an example of each. What is the difference between a movement and a shift in either a supply or demand curve? What party in a market does demand represent and what side does supply represent?  What is the key factor driving each?

If a good has many close substitutes and its price increases, what is the most likely outcome?

Which factors increase the price elasticity of demand for a good or service? (Select All That Apply)

A company has a total variable cost of $40 and a total fixed cost of $10 when producing 4 units. What is its Average Total Cost (ATC) at this level of output?

The concept of is crucial for a firm’s production decisions. How is marginal cost calculated? 

If an industry’s long-run average cost (LRAC) curve has a wide, flat bottom, what does this imply about the firms in that industry?

Moving along a bowed-out PPF from left to right, the opportunity cost of the x-axis good generally …

The price of printers (a complement to ink cartridges) rises. In the ink cartridge market, what occurs?

At its core, economics is best defined as the study of how people and societies …

A city sets a rent ceiling below the market equilibrium rent. Which direct outcome occurs?