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Spring 2018 > Eco 201 ch 1-4 > Flashcards

Eco 201 ch 1-4 Flashcards

1
Q

What is a business cycle?

A

fluctuations in economic activity

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2
Q

4 distinct parts to the business cycle?

A

Recession - GDP is decreasing; unemployment increasing
Expansion- GDP is increasing; unemployment is decreasing
Peak- GDP is at maximum level; low unemployment
Trough - GDP is a minimum level; high unemployment

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3
Q

Recession

A
  • GDP is decreasing; unemployment increasing
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4
Q

Expansion

A
  • GDP is increasing; unemployment is decreasing
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5
Q

Peak

A
  • GDP is at maximum level; low unemployment
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6
Q

Trough

A
  • GDP is a minimum level; high unemployment
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7
Q

Opportunity costs

A
  • whatever must be given up to obtain some item.
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8
Q

Two goals in economics

A

efficiency vs equity

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9
Q

Efficiency

A
  • society is getting the most from its scarce resources
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10
Q

Equity

A
  • distribute economic prosperity fairly among the members of society
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11
Q

Scarcity

A
  • society has limited resources and therefore cannot produce all the goods and services people wish to have. Ex. Clean water is a scarce resource
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12
Q

Economics

A
  • the study of how society manages its scarce resources
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13
Q

World price

A
  • the price of a good that prevails in the world market for that good
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14
Q

Protectionism

A
  • the efforts of government to protect domestic firms or industries from competition of imported goods
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15
Q

row Cameras | Opp cost coffee | opp cost

A 0 ——— 400 ______
B 50 _____ 300 ______
C 100 _____ 200 ______
D 150 _____ 100 ______
E 200 _____ 0 ————

A 
---------  50/100
100/50 50/100
100/50 50/100
100/50 50/100
100/50 ----------
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16
Q

What is an absolute advantage?

A

When one country creates more products than another.

17
Q

What is a comparative advantage and how do you determine it?

A

The comparative advantage is when you compare countries and then you divide each countries opportunity, whichever countries opportunity cost #s are lower, has the comparative advantage.

18
Q

How can you tell a country should specialize in something?

A

It has the best comparative advantage

19
Q

What is the Market

A

A group of buyers and sellers of a particular good or service

20
Q

What is Quantity Demanded?

A

The amount of the good that buyers are willing and able to purchase.

21
Q

What is Law of Demand?

A

As the price of the good increases, the quantity demanded decreases

22
Q

What is a Demand Schedule?

A

A table that shows the relationship between the price of a good and the quantity demanded.

23
Q

What is a Demand Curve?

A

A graph of the demand schedule

24
Q

What is a Change in demand?

A

A shift of the demand curve in response to a change in some variable other than price.

25
Q

What is the Law of Supply?

A

As the price of a good increases, the quantity supplied will increase

26
Q

Law of Demand

A

As the price of the good increases, the quantity demanded decreases

27
Q

Decrease in Demand

A

Shift of the demand curve to the left

This leads to a decrease in equilibrium price and a decrease in equilibrium quantity

28
Q

Increases in Demand

A

Shift of the demand curve to the right.

This leads to an increase in equilibrium price and an increase in equilibrium quantity

29
Q

In the market for computers there is a decrease in the number of computer firms. How would this affect the market for computers?

A

Supply will decrease which leads to an increase equilibrium price and a decrease in equilibrium quantity

30
Q

The following argument for Protection states that high wages in one country keeps industries from being competitive in world markets

A

Cheap Foreign Labor Argument

31
Q

The determinant of comparative advantage that looks at climates and harbors is known as

A

Physical features

32
Q

In the market for computers there is a decrease in the number of computer firms. How would this affect the market for computers?

a. Demand will increase which leads to an increase in equilibrium price and a decrease in equilibrium quantity.
b. Supply will increase which leads to an increase in equilibrium price and an increase in equilibrium quantity.
c. Demand will decrease which leads to a decrease in equilibrium price and an increase equilibrium quantity.
d. Supply will decrease which leads to an increase equilibrium price and a decrease in equilibrium quantity

A

d. Supply will decrease which leads to an increase equilibrium price and a decrease in equilibrium quantity

33
Q

The determinant of comparative advantage that looks at climates and harbors is known as

a. different physical features
b. different endowments of natural resources
c. different supplies of labor
d. different states of development of financial markets

A

a. different physical features

34
Q

Now suppose the price of oranges has increased. Apples and oranges are considered substitutes in consumption. Below let me know if the demand curve or the supple curve will change. (Only 1 will change) Also let me know what happens to equilibrium price and equilibrium quantity.

Supply or demand change (increase or decrease)
Equilibrium price (increase or decrease)
Equilibrium quantity (increase or decrease)
A

demand increase
Equilibrium price increase
Equilibrium quantity increase

35
Q

The market for premium coffee is in equilibrium.
Now suppose there is an increase in taxes on premium coffee. This increase in taxes affects the production side. Below let me know if the demand curve or the supple curve will change. (Only 1 will change) Also let me know what happens to equilibrium price and equilibrium quantity.

Supply or demand change (increase or decrease)
Equilibrium price (increase or decrease)
Equilibrium quantity (increase or decrease)
A

Supply decreases (shifts to the left)
Equilibrium price increases
Equilibrium quantity decreases

36
Q

The market for Michelin Tires is in equilibrium.
Now suppose the number of production plants of Michelin Tires has increased. This has an effect on the production of tires. Below let me know if the demand curve or the supple curve will change. (Only 1 will change) Also let me know what happens to equilibrium price and equilibrium quantity.

Supply or demand change (increase or decrease)
Equilibrium price (increase or decrease)
Equilibrium quantity (increase or decrease)
A

Supply increases (shifts to the right)
Equilibrium price decreases
Equilibrium quantity increases

37
Q

The market for Microsoft Surface tablets is in equilibrium.
Now suppose the expected prices for Microsoft Surface Tablets will increase. This will have an effect on the consumption of Microsoft Surface Tablets. Below let me know if the demand curve or the supple curve will change. (Only 1 will change) Also let me know what happens to equilibrium price and equilibrium quantity.

Supply or demand change (increase or decrease)
Equilibrium price (increase or decrease)
Equilibrium quantity (increase or decrease)
A

Demand increases (shifts to the right)
Equilibrium price increases
Equilibrium quantity increases

38
Q

Below is the demand and supply schedule for cell phones.
Price | Quantity Demanded | Quantity Supplied
A $20 | 1000 | 200
B $40 | 800 | 400
C $60 | 600 | 600
D $80 | 400 | 800
E $100 | 200 | 1000

a. What is the equilibrium price and equilibrium quantity for cell phones?
b. If the price was at $40 would the market have excess demand or excess supply?
c. If the price was $100 would the market have excess demand or excess supply?

A

a. What is the equilibrium price and equilibrium quantity for cell phones?
Qty=600; Price=$60

b. If the price was at $40 would the market have excess demand or excess supply?
Excess Demand

c. If the price was $100 would the market have excess demand or excess supply?
Excess Supply

Spring 2018 (13 decks)

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