1. Know well the graph found in Figure 7.2. Understand what is means (The intersect between the two lines is called the “equilibrium”)
a. If the price is above the equilibrium, what happens
b. What happens if the supply of a good increases?
c. What if consumer demand increases?
2. Know Alfred Marshall and his example of the raspberry patch
a. Understand how it relates to Figure 7.1 and 7.2
3. Figure 7.1: What would cause equilibrium to shift to the left?
4. Box 7.2: What is meant by diminishing marginal returns?
5. Box 7.2B: Why does the curve go down at the end?
6. Box 7.2C: Understand what it means
a. Is it a consumer or producer curve?
b. Where on the curve do inputs have the most effect?
c. Where do they have the least effect?
7. Box 7.2E:
a. Explain the meaning of the Figure
b. If you want a producer to make more product, they will have to sell the product for more than the marginal cost increase to produce it
c. Or in other words the producer has to make a profit greater than the input costs
8. Read Box 7.3 and understand its meaning (note: it was first published in 1776)
9. Figure 7.6a & b: Understand what they are trying to tell us
10. What does Figure 7.7 tell us?
Lisa
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