chapter 1

Question 1

what is the difference between microeconomics and macroeconomics?

Answer 1

micro zooms into the specific choices made by consumers and producers. macro looks at the world through a larger lens, the big picture of how consumers and firms operate.

Question 2

how are consumption and production interconnected?

Answer 2

the supply and demand curve

Question 3

what tools are used to study microeconomics

Answer 3

emipiral discipline: data analysis and experiments to explore economic phenomena as opposed to abstract theorising.

Question 4

how much percentage of electricity did bitcoin mining use in 2018

Answer 4

0.3% almost as much as entire countries (austria, chile)

Question 5

name the four key assumptions of S&D model

Answer 5

1. We focus on S&D in a single market
2. All good sold in market are identical
3. All good sold for the same price, everyone has identical info.
4. There are many producers/consumers within the market.

Question 6

name 5 factors that influence demand

Answer 6

• price
• number of consumers
• consumer income or wealth
• consumer tastes
• prices of other goods

Question 7

demand curve

Answer 7

shows the relationship between quantity of demand (x) and price (y)

Question 8

mathematical representation of the demand curve

Answer 8

example: Q = 1000-200P

QUANTITY = MAXIMUM QUANTITY - INCREMENT (PRICE)

Question 9

What is a demand choke

Answer 9

The price at which quantity demanded is zero; the vertical intercept of the inverse demand curve.

Question 10

derived demand

Answer 10

A demand for one product (such as labor) that arises from the demand for another product (a firm’s output).

Question 11

inverse demand curve

Answer 11

price as a function of quantity demanded

Question 12

demand curve shifts

Answer 12

tomato example:
if tomatoes are found to contain salmonella the demand curve shifts left (inwards)
if tomatoes are found to fight cancer demand curve shifts right (outwards)

Question 13

changes in quantity demanded

Answer 13

a movement along the demand curve

Question 14

factors influencing supply

Answer 14

• price
• suppliers cost of production
• number of sellers
• outside options

Question 15

graphical representation of supply curve

Answer 15

holding all else equal producers are willing to supply more of good as price rises.

Question 16

supply choke price

Answer 16

the vertical intercept of the supply culve

Question 17

inverse supply curve

Answer 17

write the supply formula but as a function of price not quantity eg.
Q=4P-4
becomes
P=0.25P+1

Question 18

Changes in quantity supplied

Answer 18

A movement along the supply curve that occurs as a result of a change in the good’s price. (p. 19)

Question 19

change in supply

Answer 19

A shift of the entire supply curve caused by a change in a determinant of supply other than the good’s own price.

Question 20

market equilibrium

Answer 20

The point where the demand and supply curves cross, if you follow this intersection to the respective x and y axis cross points you will find the ME price and quantity

Question 21

Mathematically deriving price and quantity demanded at market equilibrium

Answer 21

set the demand and supply equations as equal to each other.

find the price by setting the inverse demand and supply as equal