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Economics > CourseWork Test > Flashcards

CourseWork Test Flashcards

1
Q

formula of price elasticity (PED)

A

Q1 - Q0
————-
Q0
————————-
P1 - P0
————-
P0

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2
Q

what are the types demand in price elasticity

A

1- elastic demand
2- inelastic demand
3- perfectly elastic demand
4- perfectly inelastic demand
5- unitary elasticity of demand

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3
Q

state the characteristics of elastic demand

A
  • downward slopping curve, less steep & quite flat
  • % change of Qd > % change of P
  • more than 1 (can be -ve, just ignore)
  • clothes, shoes (goods that hv substitutes)
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4
Q

state the characteristics of inelastic demand

A
  • downward sloping & steep
  • less than 1
  • % change of P > % change of Qd
  • necessities (w no close substitutes)
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5
Q

formula of income elasticity (YED)

A

Q1 - Q0
————-
Q0
———————–
Y1 - Y0
————-
Y0

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6
Q

state the types of income elasticity of demand

A

1- postiive YED
2- negative YED
3- zero YED

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7
Q

if income elasticity of demand is a positive, it means…

(think: income. positive.)

A

when income rises, demand for goods also rises. (vice versa)

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8
Q

in the positive YED, the income is elastic when…

A
  • ans is more than 1
  • more than proportionate change of quantity demanded of a good
    type: normal goods (clothes) & luxury goods (diamonds)
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9
Q

in the positive YED, the income is inelastic when…

A
  • ans is less than 1
  • less than proportionate change of quantity demanded of a good
    type: necessities (bread, milk)
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10
Q

if YED is negative, it means…

A

when income rises, demand of goods fall.
type: inferior goods (broken rice, secondhand products)

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11
Q

if YED is zero, it means…

A

when income rises or falls, demand of goods remains unchanged
type: basic necessities (flour, sugar, oil)

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12
Q

formula of cross elasticity (XED)

A

Qx1 - Qx0
————–
Qx0
——————–
Py1 - Py0
————-
Py0

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13
Q

what are the types of XED?

A

1- positive XED
2- negative XED
3- zero XED

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14
Q

in positive XED, it means…

A
  • positive answer
  • if price of Y rises, the demand of X rises too.
    type: substitute goods
    relationship: positive (upwards slopping curve)
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15
Q

in negative XED, it means…

A
  • negative answer
  • if price of Y rises, demand of X falls.
    type: complementary goods
    relationship: negative (downward slopping curve)
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16
Q

in zero XED, it means…

A
  • answer is zero
  • if price of Y rises, demand of X remains unchanges
    type: unrelated goods
    graph: vertical straight line
17
Q

opportunity cost means

A

the next best alternative sacrificed for a chosen alternative

18
Q

state the 3 characteristics of private goods + briefly summarise

A

1- excludability: can be excluded if consumers are not willing or able to pay for it
2- rivalry in consumption: one person’s consumption reduces the quantity left for
others to consume
3- rejectability: if you dont like, can reject and look for another alternative

19
Q

state the 3 characteristics of public goods + brief summary

A

1- non-excludability: nobody is prevented from using
2- non-rivalry: one person’s consumption will not reduce the quantity left for
another to consume

20
Q

whats the use of an economic system?

A

to determine how scarce resources are used to produced goods & services

21
Q

state the 3 types of economic systems + brief summary

A

1- command economy - everything controlled by gov + 3 basic economic problems are solved by gov
2- market ecomony - no gov intervention, economic activities carried out by priv firm or individuals
3- mixed economy - public & priv work tgt for economic growth of country

22
Q

what is planned economy?

A

command economy

23
Q

what is laissez-faire economy?

A

capitalist economy, market economy

24
Q

state the factors that affects supply

A

1- price of related goods
a) competitive supply b) complementary in supply c) substitute in supply
2- technology advancement
3- cost of production
4- government policies
5- number of producers
6- climate

25
Q

state the factors affecting demand

A

1- price of related goods
a) complementary goods b) substitute goods
2- income
3- advertising
4- government policies
5- climate
6- expected future prices

26
Q

in the market, when quantity demanded exceeds quantity supplied, it means

A

shortage

27
Q

during a shortage, the expected price of a good or service will…

A

rise

28
Q

in the market, if the quantity demanded is less than the quantity supplied, it is a

A

surplus

29
Q

if there is a surplus, the expected price of a good or service will…

A

fall

30
Q

another word for surplus is

A

excess supply

31
Q

another word for shortage is

A

excess demand

Economics (2 decks)

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