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Foundational Biology > Chemistry 1 > Flashcards

Chemistry 1 Flashcards

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1
Q

Net benefits is equal to

A

NB = TB - TC
total benefits - total cost

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2
Q

Opportunity cost definition

A

The value lost by not selecting a particular option .

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3
Q

Total opp cost

A

= Direct opp cost + Indirect opp cost

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4
Q

Direct opp cost
Indirect opp cost

A

Direct = Cost of resource that’ll be used in the chosen alternative(EXCLUDES Sunk costs)

Indirect = Benefits - Direct costs of next best alternative action
e.g. Direct cost of A + NB of B = opportunity cost of forgoing B

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5
Q

Absolute advantage

A

Ability to produce a good using FEWER INPUTS than another producer

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6
Q

Comparative Advantage

A

Ability to produce a good at LOWER Opp cost than other producer

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7
Q

Sunk cost

A

Reflects the value of resources used BEFORE making a decision(not considered in OPP cost)

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8
Q

Marginal benefit

A

Increment in total benefit by increasing the level of activity by 1 unit

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9
Q

Marginal cost

A

Increment in total costs by increasing the level of activity by 1 unit

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10
Q

When is Net benefit maximised?

A

MB ≥ MC, if MB is LESS than MC, its not optimal

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11
Q

Does a change in consumer tastes leads to a movement along the demand curve

A

FALSE, it will SHIFT demand not a movement along it.

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12
Q

Increase in price leads to a decrease in qty demanded

A

TRUE, qty demanded and price are inversely related

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13
Q

A decrease in production costs leads to a rightward shift in supply curve

A

TRUE

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14
Q

An increase in price leads to a leftward/upwards shift in the supply curve

A

FALSE, its not a non price determinant doesnt shift curve

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15
Q

Assume that tastes change so that tennis is no longer as desirable to play as it is now . What will happen to market of tennis ball

A

Demand decreases

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16
Q

When does trade occur(refer to MB and MC)

A

When both parties have MB≥MC for BOTH parties

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17
Q

Characteristics of Competitive markets

A

Many sellers with homogenous goods
Sellers are price takes
No barrier of entry
Economic profits are 0 in long run

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18
Q

Law of Demand

A

Price & qty are inversely related ceteris paribus

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19
Q

Law of Supply

A

Price & qty are positively related ceteris paribus

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20
Q

Shifts in supply

A

Technology
Input prices
Price expectations

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21
Q

Elasticity definition

A

The responsiveness of Demand & Supply to changes in price(magnitude of change)

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22
Q

Demand elasticity = 0

A

Perfectly inelastic

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23
Q

Demand elasticity < 1

A

Inelastic

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24
Q

Demand elasticity > 1

A

Elastic

25
Q

Demand elasticity = 1

A

Unit elastic(45 degree angle), equally proportional changes when a variable changes

26
Q

Demand elasticity = ∞

A

Perfectly Elastic

27
Q

Supply elasticity = 0

A

Perfectly inelastic

28
Q

Supply elasticity > 1

A

Elastic

29
Q

Supply elasticity < 1

A

Inelastic

30
Q

Supply elasticity = 0

A

Unit elastic

31
Q

Supply elasticity = ∞

A

Perfectly elastic

32
Q

Income elasticities:
Normal goods
Necessary goods
Luxury goods
Inferior

A

Normal goods > 0
Necessary goods 1 > y > 0 Engels law
Luxury goods > 1
Inferior goods < 0

33
Q

Cross price elasticity

A

Substitute goods have E > 0 (+)
Complementary goods E< 0 (-)

34
Q

Indirect interventions

A

Taxes
Subsidies

35
Q

Direct controls(Price and qty )

A

Price ceiling
Price floor
Quota

36
Q

What is a tax incidence

A

Both buyers and sellers share burden of tax

37
Q

Asymmetric information

A

when 1 economic actor knows MORE than the otherE

38
Q

Experience good

A
  • Product/service where features & characteristics arent observable at time of purchase but learns about quality over time
  • Seller information > buyer
    E.g. Used cars, hair cut, travel, advice
    May lead to adverse selection
39
Q

Search goods

A

Producer/service with features & characteristics that are easily evaluated before purchase
E.g. Groceries, toys

40
Q

Credence good

A

Features and characteristics is difficult to ascertain at time of purchase and CONTINUES to be difficult to ascertain
e.g. vitamins, car repair, education

41
Q

Adverse selection

A

There’s asymmetric information and an offer by the informed party reveals NEGATIVE INFORMATION about product being offered

42
Q

Moral hazard

A

A party engages in risky behavior knowing that another party bears the consequencesT

42
Q

Factors of production

A

Land
Labour
Capital

43
Q

Production function

A

Q = (K, L )
K = Capital
L = Land

44
Q

Law of diminishing returns

A

As input increases in equal increments, a point will be reached where resulting additions lead to output decrease

45
Q

Are short run costs fixed

A

At least 1 input fixed

46
Q

Are long run costs fixed

A

All inputs are variable

47
Q

STRC = ?

A

FC + VC

48
Q

Are capital investments non-sunk?

A

Depends, if the capital can be sold then a % of fixed cost can be recovered meaning its partly non-sunk

49
Q

SRMC =

A

SRTC’ or VC’

50
Q

SRATC =

A

SRTC/Qty or (VC+FC)/qty or AFC + AVC

51
Q

Why do AFC decrease continuously

A

Because its the same fixed cost being spread over LARGER amounts of outputs

52
Q

Characteristics of monopoly

A

1 firms is a price maker
High barrier of entry
1 unique good no close substitutes

53
Q

Revenue maximization in monopoly

A

MR = 0

54
Q

Profit maximization

A

MR = MC

55
Q

What is the derivative of TR equal to?

A

AR and MR

56
Q

When should firms exit

A

Earning -profits
= TR < TC

57
Q

Market power

A

The ability to raise its selling prices ABOVE MC & the perfectly competitive level

58
Q
A

Foundational Biology (3 decks)

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