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Biol 108 > Econ 101 Midterm > Flashcards

Econ 101 Midterm Flashcards

1
Q

Normal Good

A

Increase in income and increase in a demand for a good

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2
Q

Inferior Good

A

Increase in income decrease in demand for a good

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3
Q

Substitues

A

Rise in the price of one good causes a increase in demand for another good.

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4
Q

Complements

A

Rise of price of one good causes decrease of demand for another

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5
Q

Inelastic demand curve

A

E<1 Consumers are not sensitive to price changes steep curve
Change in price is always larger then the change in quantity demanded

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6
Q

Surplus

A

Quantity supplied is more then quantity demanded above equilibrium

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7
Q

Shortage

A

Quantity demanded is more then quantity supplied below equilibrium

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8
Q

Opportunity cost

A

Whatever is given up when you make a decision

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9
Q

Comparative advantage

A

Whoever has the lower opportunity cost in producing a good

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10
Q

Circular flow diagram what it is and draw it

A

Visual model of the economy shows how dollars flow through markets households and firms

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11
Q

Production Possibilities Frontier or PPF
Slope

A

Shows the combination of two goods in an economy can possibly produce given available resources and tech
Use slope to calculate opportunity cost whatever is on the horizontal axis negative

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12
Q

Factors of production

A

resources used to produce a good

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13
Q

PPF bow shaped

A

When resource’s used in production are different

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14
Q

Microeconomic

A

How households and firms make choices and how they interact in markets

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15
Q

Positive vs Normative statements

A

Scientists make positive statements describe world as it is economists make normative statements describe how the world should work

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16
Q

Interdependence

A

Trade is mutually beneficial

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17
Q

Absolute advantage

A

ability to make good or services with less time or resources than another producer

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18
Q

Market

A

Group of buyers and sellers

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19
Q

Competitive market

A

many buyers and sellers and no one has a significant impact on price

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20
Q

Law of demand

A

quantity of a good or service falls as the price rises (everything else equal)

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21
Q

Change of price

A

Does not shift supply or demand curve only causes movement along them

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22
Q

Law of supply

A

quantity supplied rises as price rises

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23
Q

Equiilibrium

A

Quantity supplied equals quantity demanded

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24
Q

Perfectly inelastic demand

A

straight line
quantity demanded same no matter the price
elasticity=0
percent chnage in demand=0

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25
Elastic demand
Greater then 1 percent change in demand is higher then percent change in price relatively flat slope buyers sensitivity relatively high
26
Inelastic demand
Less than 1 percent change in quantity is greater then percent change in price relatively steep slope price sensitivity low
27
Unit elastic demand
Elasticity =1 Intermediate slope percent change is the same
28
Perfectly elastic demand
Flat line price change is 0 sensitivity of buyers is extreme
29
Revenue
PriceX quantity Depends on price elasticity of demand higher price more money you make per unit but you sell fewer units
30
Income elasticity
percent change in quantity demanded divided by percent change in income positive for normal goods negative for inferior goods
31
Cross price elasticity
%change in QD of good A divided by change in QD of good B Postive for substitutes negative for complements
32
Price elasticity of supply
How much quantity supplied based on change in price
33
Perfectly inelastic supply
Vertical line percent change in QS=0 Sensitivity none Extreme
34
Inelastic supply
Percent change in QS is less then % change in price
35
Unit elastic supply
% change in quantity supply =% change in price =1 sensitivity intermediate
36
Elastic supply
E>1 % change of quantity supplied is more then % change in price Relatively flat sensitivity high
37
Perfectly elastic supply
Flat line % change in price =0 sensitivity is extreme
38
Price Ceiling
maximum price for a good or service
39
Price floor
minimum price for a good or service
40
Taxes
The government can make buyers or sellers pay a specific amount on every unit they buy or sell
41
Incidence of Tax
How the burden is shared among market participants
42
Supply is more elastic then demand in tax scenerio
Easier for sellers to leave the market then buyers so the buyers carry more of the burden of tax
43
Either buyer or seller is perfectly elastic
The tax burden is not shared
44
Consumer surplus
=WTP-P Equal to the total area under the demand curve above the price
45
Laffer Curve
larger tax causes revenue to fall horseshoe
46
Deadweight loss
Fall in the total surplus due to things like tax
47
Supply or demand inelastic for DWL
Harder for sellers or buyers to leave market tax reduces Q by a little and DWL little
48
Supply or demand elastic for DWL
Easier for Buyers or sellers to leave market bigger drop in Q and bigger DWL
49
Increase of tax and DWL
Increase of tax causes DWL to more then increase
50
Tarrifs
Tax on imports Domestic price changes to world price
51
Externalities
Cost or benefit from action that affects a bystander Neg harms- eqm quantity higher then socially desirable taxes Pos benefits-Eqm quanity lower then socially desirable subsidies
52
The Coase Theorem
Private parties can bargain the allocation of resource without extra cost they can solve externalities on their own
53
Private Goods
Excludable and rivals in consumption
54
Common resources
Non excludable and rival in consumption
55
Natural monopolies club goods
Non rival and excludable
56
Public Goods
Non rival non excludable
57
Excludable
prevent people from consuming it
58
Marginal buyer
First buyer to leave the market lowest WTP
59
Import quota
Max amount of goods that can be a country
60
Marginal seller
first seller to leave market when price increases
61
Tragedy of the commons
individuals with access to a common resource act in their own interest therefore depleting the resource
62

Biol 108 (12 decks)

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