Mater Academy/ Dual Enrollment
Principles of Microeconomics
Unit 2: Elasticity and Consumer Behavior
Support text: McConnell and Brue, Economics 18th Ed, Chapter 6, 7
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Price Elasticity of demand: Defining and Measuring Elasticity
Interpreting Price Elasticity of Demand
Price Elasticity of Supply
Consumer and Producer Surplus
Efficiency Losses or Deadweight Loss
Law of Diminishing Marginal Utility
Theory of Consumer Behavior
Utility Maximization
Objective
In this section we are going to study something else about of the supply and demand model and define a
variety of terms used to evaluate market results. We are going to introduce the concept of price elasticity
of demand to understand how the quantity demanded responds to changes in price, and how the quantity
bought and sold in a market affect consumer, producer, and overall welfare.
Assignments
1. Vocabulary and Problem Set #2. Complete the vocabulary and take notes of the basic concepts
in class. Then, print the Problem Set #2 and include them as a front cover. Use additional sheets
of paper for your answers. Label axes and DO NOT type your answers. Work on time for a
classwork grade.
2. Assigned Reading # 2 for a homework grade “Why was the Great Newspaper Heist So Easy?
By using the book “Economics by Example”, student will read the Chapter 4, 1. “Why was the
Great Newspaper Heist So Easy? Diminishing marginal Utility and the Price Elasticity od
Demand”, pages 26-32. After reading the chapter students will answer 4 questions (see page 32).
Follow instruction for your assignment.
 The assessment is due by 02/12/2015 or 2/13/2015 (according to your class schedule) before
2:30 p.m. @ room 116.late work will not be accepted.
 Student absent to school must send the assessment to Ms. De la Torre before the due day
(by email, with other student, etc.).
 Explain and justify your answers. Include graphs in your answers (if applied).
 Type your paper on a computer and print it out on standard, white 8.5 x 11-inch paper.
 Double-space the text of your paper, and use a legible font (size 12)
 Set the margins of your document to 1 inch on all sides.
 In the upper left-hand corner of the first page, list your name, your FIU student ID, your
instructor's name (Ms. De la Torre), the course name “Principles of Macroeconomics”, and
the date . Again, be sure to use double-spaced text.
 Title your work: “Why was the Great Newspaper Heist So Easy? Diminishing marginal Utility
and the Price Elasticity od Demand”,
Vocabulary and Key Concepts / Assignment “Price Elasticity of Demand and Consumer
Behavior”/ by using McConnell textbook, Chapters 6, 7 pages 113-131 and 135-154
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Law of demand
Price elasticity of demand
Price-elasticity coefficient of demand /
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Elastic demand
Inelastic demand
Unit elasticity
Perfectly inelastic demand
Perfectly elastic demand
Total revenue
Total revenue test
Price Elasticity of Supply
Price-elasticity coefficient of supply/ Es
Basic factor affecting the price elasticity
of supply
Short run
Long run
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Cross elasticity of demand
Income elasticity of demand / Ei
Consumer surplus
Producer surplus
Efficiency losses
Law of diminishing marginal utility
Utility
Total utility
Marginal utility
Factor affecting decisions of a typical
consumer
Rational Behavior
Utility-Maximizing Rule
Income Effect and Substitution Effect
The value of time/ economic value of
time