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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
Q

Elastic demand

A

Greater then 1
percent change in demand is higher then percent change in price
relatively flat slope
buyers sensitivity relatively high

26
Q

Inelastic demand

A

Less than 1
percent change in quantity is greater then percent change in price
relatively steep slope
price sensitivity low

27
Q

Unit elastic demand

A

Elasticity =1
Intermediate slope
percent change is the same

28
Q

Perfectly elastic demand

A

Flat line
price change is 0
sensitivity of buyers is extreme

29
Q

Revenue

A

PriceX quantity
Depends on price elasticity of demand
higher price more money you make per unit
but you sell fewer units

30
Q

Income elasticity

A

percent change in quantity demanded divided by percent change in income
positive for normal goods
negative for inferior goods

31
Q

Cross price elasticity

A

%change in QD of good A
divided by change in QD of good B
Postive for substitutes
negative for complements

32
Q

Price elasticity of supply

A

How much quantity supplied based on change in price

33
Q

Perfectly inelastic supply

A

Vertical line
percent change in QS=0
Sensitivity none
Extreme

34
Q

Inelastic supply

A

Percent change in QS is less then % change in price

35
Q

Unit elastic supply

A

% change in quantity supply =% change in price =1
sensitivity intermediate

36
Q

Elastic supply

A

E>1 % change of quantity supplied is more then % change in price
Relatively flat
sensitivity high

37
Q

Perfectly elastic supply

A

Flat line % change in price =0
sensitivity is extreme

38
Q

Price Ceiling

A

maximum price for a good or service

39
Q

Price floor

A

minimum price for a good or service

40
Q

Taxes

A

The government can make buyers or sellers pay a specific amount on every unit they buy or sell

41
Q

Incidence of Tax

A

How the burden is shared among market participants

42
Q

Supply is more elastic then demand in tax scenerio

A

Easier for sellers to leave the market then buyers so the buyers carry more of the burden of tax

43
Q

Either buyer or seller is perfectly elastic

A

The tax burden is not shared

44
Q

Consumer surplus

A

=WTP-P
Equal to the total area under the demand curve above the price

45
Q

Laffer Curve

A

larger tax causes revenue to fall horseshoe

46
Q

Deadweight loss

A

Fall in the total surplus due to things like tax

47
Q

Supply or demand inelastic for DWL

A

Harder for sellers or buyers to leave market tax reduces Q by a little and DWL little

48
Q

Supply or demand elastic for DWL

A

Easier for Buyers or sellers to leave market bigger drop in Q and bigger DWL

49
Q

Increase of tax and DWL

A

Increase of tax causes DWL to more then increase

50
Q

Tarrifs

A

Tax on imports
Domestic price changes to world price

51
Q

Externalities

A

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
Q

The Coase Theorem

A

Private parties can bargain the allocation of resource without extra cost they can solve externalities on their own

53
Q

Private Goods

A

Excludable and rivals in consumption

54
Q

Common resources

A

Non excludable and rival in consumption

55
Q

Natural monopolies club goods

A

Non rival and excludable

56
Q

Public Goods

A

Non rival non excludable

57
Q

Excludable

A

prevent people from consuming it

58
Q

Marginal buyer

A

First buyer to leave the market lowest WTP

59
Q

Import quota

A

Max amount of goods that can be a country

60
Q

Marginal seller

A

first seller to leave market when price increases

61
Q

Tragedy of the commons

A

individuals with access to a common resource act in their own interest therefore depleting the resource

62
Q
A

Biol 108 (6 decks)

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