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Economy > Chapter 4,5, & 6 Review > Flashcards

Chapter 4,5, & 6 Review Flashcards

0
Q

Unitary Elastic

A

When elasticity of demand for a good is exactly 1

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1
Q

Elasticity of supply

A

A measure of how suppliers react to a change in price

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2
Q

Law of supply

A

The higher the price, the larger the quantity produced.

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3
Q

Law of demand

A

The lower the price, the more consumers will buy.

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4
Q

Marginal cost

A

The cost of producing one more unit of a good.

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5
Q

Inelastic

A

Term for supply of a product that cannot easily or quickly expand or reduce its production

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6
Q

Excise tax

A

Payment to the government in the production of sale of a good

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7
Q

What info does price tell us?

A

Opportunity costs

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8
Q

What two factors have the greatest impact on price?

A

Supply & Demand

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9
Q

Demand

A

Desire to own something

And ability to pay for it

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10
Q

Reasons why law of demand works…

A

Buying power
Diminishing personal value
Diminishing marginal utility
Substitutes

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11
Q

Market demand

A

Total consumer demand

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12
Q

When all other things equal only

A

Price impacts demand

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13
Q

Shift in demand

A

A change in the quantity demanded

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14
Q

Determinants of demand

A
  1. Change in income
  2. Change in price/availability of complements or substitutes
  3. Change in weather or season
  4. Change in styles, tastes, or habits
  5. Change in number of buyers
  6. Change in expectations
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15
Q

Elasticity measures

A

The impact made by prices changes

And the impact of the consumers willingness and ability

16
Q

Elastic demand

A

Demand sensitive to a change in price

Price makes a difference

17
Q

Inelastic demand

A

Not sensitive to a change in price

Price make little difference in what consumers buy

18
Q

Methods to determine elasticity

A
  1. Amount of available substitutes
  2. % of budget it consumes
  3. Necessity vs. Luxury
  4. Amount of time one has
19
Q

Revenue test

A

Test to determine elastic demand
Price * quantity = revenue
If price goes up and revenue goes up -> inelastic
If price goes up and revenue goes down -> elastic

Economy (9 decks)

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