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Econ 102 > Chapter 3-5 exam > Flashcards

Chapter 3-5 exam Flashcards

1
Q

price ceiling set the _____ legal process a seller may charge for a product or service

when p* is ____

consumer is complaining

A

maximum

too high

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2
Q

a price floor is a _____ price fixed by the government

when p* is too _____

producer is complaining

A

minimum

low

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3
Q

when demand impact is greater than supply impact

A

an increase in price
decrease in quantity

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4
Q

when demand is equal to supply impact

A

an increase in price
unchanged for quantity

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5
Q

when demand impact is less than supply

A

increase in price
decrease in demand

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6
Q

a products ____ elasticity of demand- the _____ or sensitivity of consumer to the price change

A

price

responsiveness

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7
Q

the demand for a product is relatively elastic or ____ - consumers are ___ responsive to price changes

A
  1. elastic
  2. very
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8
Q

the demand for a product is relatively inelastic or ____ - consumers _____ respond much to price changes

A
  1. inelastic

2.do not

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9
Q

the price-elasticity ______ and formula

A

coefficient

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10
Q

formula %quantity demanded vs % price

A

ie. -2% / 10 = 0.2

-20% / 10 = 2

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11
Q

more than 1

A

elastic

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12
Q

less than 1

A

inelastic

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13
Q

Ed is used to measure the consumers ____ to price change

A

responsiveness

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14
Q

due to the property law of demand, Ed will always be a ____ number

A

negative

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15
Q

equal to one

A

unit

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16
Q

Ed= 0

A

perfectly inelastic

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17
Q

Ed= infinity

A

perfectly elastic

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18
Q

fill in blank: 1.2 demand is relatively elastic it means that a 10% increase will cause the product to fall
my

Solve it!!!!

A

12%

1.2 * 10 = 12

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19
Q

Midpoint formula

A

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

ex. (2-3)/(2+3)/2//(5-4)/(5+4)/2 = 1.8 = elastic

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20
Q

demand is more price elastic toward the ___ price range than toward the __ price range

A

high

10%

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21
Q

elasticity vs slope- a straight line of the demand curve, the slope is ____ but the elasticity ____

A
  1. constant
  2. varies
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22
Q

the total revenue test—

A

(TR= P*Q)

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23
Q

elastic demand- if demand is elastic a price ____ will increase total revenue

A

decrease

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24
Q

inelastic demand- if demand is inelastic a price ___ will increase total revenue

A

increase

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25
Q

unit elasticity- an increase increase or decrease in TR remains unchanged

A

ie. 10/10 = 1

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26
Q

test example: last year they charged $4.00 (p1) and parked 1,000 cars (q1) the. next year they raise it to $5.00(p2) and 850 (q2)

solve

A

1) TR= p1q1= 41,000=4,000
= p2q2= 5850=4,250.
TR ^ and P^ so it must be true

Ed= 850-1000/850+1000/2 /// 5-4/5+4/2= 0.73 inelastic TR ^

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27
Q

less substitutes =

A

less elastic

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28
Q

the steeper the graph the more—-

A

inelastic

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29
Q

the flatter the graph the more——-

A

elastic

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30
Q

high price range =

lower prices range =

A

more elastic

less elastic

31
Q

the more substibility a consumer has the more ___ they become

A

elastic

32
Q

more expensive item compared to income

A

more elastic

33
Q

more luxury goods and time

A

more elastic

34
Q

necessities

A

inelastic

35
Q

large crop yield demand = 0.2 to 0.24

the graph is steep == ???

A

inelastic

36
Q

a products ____ elasticity of suply- the responsiveness or sensitivity of producers to a price change

A

price

37
Q

the price-elasticity - ____ of supply and formula

A

coefficient

38
Q

supply only determinate is

A

time

39
Q

immediate market period

A

0

40
Q

short run

es<1

A

inelastic

41
Q

the long run

Es> 1

A

more elastic

42
Q

cross price

A

how sensitive consumer purchases one product to a related product

43
Q

substitute goods, complementary vs independent goods

A

ie. pepsi = 30/10=3

  sprite=5/10=0.5

pepsi is closer

the higher the Exy the closer the substitute

44
Q

Exy> 0 —> x and y are ____

A

substitutes

45
Q

Exy=0—-> x and y are

A

unrelated

46
Q

Exy < 0 —> x and y are

A

complements

47
Q

what’s why the elasticity is always measured in terms of

A

percentages

48
Q

but all else equal, a linear demand schedule becomes more inelastic the more ____ it’s slope

A

vertical

49
Q

since the demand for natural gas could be usually ____ which would be easy to depict as unusually _____

A

inelastic

vertical

50
Q

by the way eliminate opportunities from market manipulation so in the long run the market can be pretty ____ at giving us what we wants economics works in the ___ run

A

effective

long

51
Q

decrease in price = ___ in quantity

A

increase

52
Q

increase in price = ___ in quantity

A

decrease

53
Q

greater than 0 =

A

substitute

54
Q

less than 0 =

A

complement

55
Q

= to 0 =

A

unrelated

56
Q

utility is a ___ - satisfying power; utility is _____

A

want

subjective

57
Q

Total utility- (TU)- the total amount of ___ or pleasure a person derives from consuming some specific quantity of a good or service

A

utility

58
Q

Marginal utility (MU)- the ___ satisfaction a consumer realizes from an ___ unit of a product

A

extra

additional

59
Q

TU ^ at a ____ rate

A

deceasing/ ie. diminishing mu

60
Q

when MU= 0, TU is at its ___

A

maximum

61
Q

how costumers allocate/ spend their money among many goods and services

A

allocate

62
Q

consumption choice made by typical consumer:

___ behavior ( get the most for their money/ to maximize utility)

____ ( in part preferences are based on the realization of marginal utility by the consumer)

____ constraint (budget limitation at a point in time)

—— ( scarcity vs.unlimited wants —-> price tag for every good)

A

rational

preferences

budget

price

63
Q

utility maximizing rule—

A

MUa/Pa = MUb/Pb

64
Q

too few =

A

larger

65
Q

too many =

A

smaller

66
Q

____ MU/P reduce the budget

A

higher

67
Q

____ MU/P reaches max

A

lower

68
Q

utility is ___ to measure

A

difficult

69
Q

utility-maximizing rule- to maximize satisfaction the consumer should allocate all their money income so that the _____ spent on each product yields the same amount of marginal utility

A

last dollar

70
Q

that is the consumer will maximize her satisfaction when she allocates her money income so that the _____ spent on product A, the last on product, and so on yield the same amount of _____

A

last dollar

marginal utility

71
Q

from an accounting standpoint, cost refers to direct or out of pocket or ____ costs

A

explicit

72
Q

accounting profits (lie) = TR- ____ costs

A

explicit

73
Q

economic costs = explicit costs + ___ costs

A

implicit

74
Q

if you find that a business owner is making zero economic profit, it doesn’t mean that they earn ____ it means that the revenue are enough to cover all your costs even the value of gneiss owners ____

A

nothing

time

Econ 102 (3 decks)

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