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Skool sux > Acctg133 Midterms Coverage > Flashcards

Acctg133 Midterms Coverage Flashcards

1
Q

What is the meaning of the following acronyms?
PSE
PED
PES
IED
CPED

A

In the same order:
Philippine Stock Exchange
Price Elasticity of demand
Price Elasticity of supply
Income Elasticity of Demand
Cross Price Elasticity of Demand

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2
Q

This is a term relative based on the industry where one is involved in.

A

Market

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2
Q

How does economics define the word “Market”?

A

As a place where buyer and sellers meet

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3
Q

Is the quantity of goods and services that buyers are able and willing to buy.

A

Demand

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3
Q

As price increases what happens to demand?

A

As price increases, Demand decreases
(Inverse relationship)

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3
Q

What is a
Demand Schedule?
Demand Curve

A

Its the table cross referencing Price and Demand
Its a (line) graph cross referencing Prince and Demand

Price is Y on a graph, Quantity is X

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4
Q

In price vs QD/QS which is the independent and dependent variable?

A

Price is always the independent variable
QD/QS is the dependent because it’s the value we want to know.

In a linear regression, Price is always X and QD/QS is Y

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5
Q

What is the law of demand?

A

As price increases, quantity demanded will decrease ceteris paribus (all factors are constant)

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5
Q

These are goods and services that have an decreasing demand when income increases.

A

Inferior Goods

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5
Q

What are the other factors affecting demand?

A
  1. Income
  2. Price of related goods and services
  3. Taste and preferences
  4. Expectations on future prices
  5. Changes in population
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6
Q

These are goods and services that have an increasing demand when income increases.

A

Normal Goods

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7
Q

Commodities could be either?

A

Normal Goods/Inferior Goods

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8
Q

Price of related goods can either be?

A

Substitute Goods/Complimentary Goods

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8
Q

These are goods that can replace another commodity in its absence

A

Substitute Goods

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9
Q

These are goods that go hand-in-hand with each other

A

Complimentary Goods

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10
Q

Regarding Expectations on future prices, what is its effect on QD and QS?

A

If Prices will increase in the Future QD at the present will Increase and QS will Decrease
But
If Prices will decrease in the Future QD at the present will Decrease and QS will Increase

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11
Q

This is the quantity of goods and services sellers are able and willing to sell at different prices

A

Supply

11
Q

As price increases what happens to Supply?

A

As Price increases Supply Increases
(Direct Relationship)

12
Q

What is a
Supply Schedule?
Supply Curve?

A

Its the table cross referencing Price and Supply
Its a (line) graph cross referencing Prince and Supply

12
Q

What are the Other Factors affecting Supply?

A
  1. Input Price
  2. Price of Related goods and Services
  3. Expectations on Future Prices
  4. Technology
  5. Government Regulations
  6. Number of Suppliers
  7. Unexpected calamities or Natural Disasters
12
Q

What is the Law of Supply?

A

As Price increases, Quantity Supplied will increase ceteris paribus (assuming all factors are constant).

13
Q

This is the point where QD=QS

A

Equilibrium

14
Q

The Triangle above the equilibrium point is?

A

Surplus

15
Q

The Triangle below the equilibrium point is?

A

Shortage

15
Q

This is a measure of the impact of one variable over the other.

A

Elasticity

16
Q

This is the measure of how much the quantity demanded of a good responds to change in the price of the good.

A

Price Elasticity of Demand

16
Q

This is the measure of how much the quantity demanded of a good, responds to change in consumer income.

A

Income elasticity of Demand

16
Q

This is the measure of how much the quantity demanded of one good responds to change in the price of another good.

A

Cross price elasticity of demand

17
Q

This is the measure of how much the quantity supplied of a good responds to change in the price of the good.

A

Price Elasticity of Supply

17
Q

Formula for PED (Give basic and Midpoint)

A

(((Q2-Q1))/Q1)/(((P2-P1))/P1)
and
(((Q2-Q1)/(Q2+Q1))/2)/(((P2-P1)/(P2+P1))/2)

18
Q

What does the following PED’s mean?
1>
<1
=1
=Infinite
=0

A

In the same order they mean
Elastic (Q increases more than P)
Inelastic (P increases more than Q
Unit Elastic (They increase at an equal rate)
Perfectly Elastic (If price stays the same, Q increases infinitely)
Perfectly Inelastic (Q stays the same no matter the price)

18
Q

How many possible reasons are there for PED to be higher?

A

5

18
Q

Formula for IED

A

(((Q2-Q1))/Q1)/(((I2-I1))/I1)

18
Q

What does IED determine?

A

Whether a good is normal or inferior

19
Q

What do the following IED’s mean?
>0
>1
<1
<0

A

In the same order
Normal Good
Normal Good (Necessity) Income Inelastic
Normal good (Luxury) Income Elastic

20
Q

Normal goods can be either?

A

Necessity or Luxury

21
Q

This is the measure of percent increase in the quantity demanded of goods and services when there is a percent increase in the price of related goods of a commodity

A

Cross Price Elasticity of Demand

22
Q

What do the following CPED’s mean?
>0
<0

A

In the same order
Substitute good
Complementary Good

23
Q

Formula for CPED and Midpoint CPED

A

Qy2-Qy1 Qy2-Qy1
———— ——————
Qy1 (Qy2+Qy1)/2
————– —————————–
Px2-Px1 Px2-Px1
————- ————
Px1 (Px2+Px1)/2

23
Q

How should you use CPED?

A

Treat it like this, QDy is what we want to know how it is affected by increases/decreases in the price of QDx
Example:
Badminton Racket=QDx and Px
Shuttlecock=QDy and Px
we can phrase it like “We want to know how the change in the price of badminton racket affects the demand of Shuttlecock”
if we reverse it, it becomes “We want to know how the change in the price of shuttlecock affects the demand of badminton Racket”

Skool sux (15 decks)

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