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fall 2024 > econ exam 1 > Flashcards

econ exam 1 Flashcards

ch 1-3

1
Q

what is economics

A

the study of the allocation and use of scarce resources to satisfy unlimited human wants and needs

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2
Q

define law of demand

A

the relationship between price and quantity demanded that is either negative or inverse

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3
Q

identify the three reasons why law of demand makes sense

A

the substitution effect, the real balances effect, and the law of diminishing marginal utility

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4
Q

what is the substitution effect

A

moves people toward the good that is now cheaper or away from the good that is now more expensive

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5
Q

what is the real balance effect

A

when a price increases it decreases your buying power causing you to buy less

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6
Q

what is the law of diminishing marginal utility

A

the amount of additional happiness that you get form an additional unit of consumption falls with each additional unit

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7
Q

define the law of supply

A

the statement that there is a positive relationship between price and quantity supplied

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8
Q

why does increasing marginal cost make sense in the law of supply

A

because firms require higher prices to produce more output

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9
Q

why does law of supply make sense

A

many firms produce more than one good, an increase in the price of good A makes it more profitable so resources are diverted from good B to produce more of good A

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10
Q

define demand

A

relationship between price and quantity demanded

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11
Q

define quantity demanded

A

how much consumers are willing and able to buy at a particular price during a particular period of time

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12
Q

what is the difference between demand and quantity demand

A

quantity demand is a point on a demand relationship

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13
Q

define supply

A

the relationship between price and quantity supplied

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14
Q

define quantity supplied

A

how much firms are willing and able to sell at a particular price during a particular period of time

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15
Q

what is the difference between supply and quantity supplied

A

quantity supplied is a point on a supply relationship

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16
Q

list the determinants of supply

A

price of inputs
technology
price of other potential output
number of sellers
expected future price
excise taxes
subsides

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17
Q

list the determinants of demand

A

taste
income
normal goods
inferior goods
price of other goods
complement
substitute
population of potential buyers
expected price
excise taxes
subsidies

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18
Q

define elasticity

A

the responsiveness of quantity to a change in another variable (like price)

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19
Q

explain why elasticity is related to the slope of the curve but is not simply the slope of the curve

A

it is related to slope because a steeper demand curve has a smaller elasticity than a flatter one, but it is not the same because on a linear demand curve, elasticity is greater at a higher price

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20
Q

define consumer surplus

A

the value you get that is in excess of what you pay to get it

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21
Q

where is consumer surplus on a graph

A

the area below the demand curve and above the price line

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22
Q

define producer surplus

A

the money the firm gets that is in excess of its marginal costs

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23
Q

where is producer surplus on a graph

A

area below price line and above the supply curve

24
Q

what does a increasing opportunity cost graph look like

A

a curved line

25
Q

what does a constant opportunity cost graph look like

A

a straight line

26
Q

what would an increase in taste for a good look like on a graph

A

demand curve shifted to the right

27
Q

what would a decrease in the tase for a good look like on a graph

A

demand curve shifted left

28
Q

what would an increase in price of a complement for a good look like on a graph

A

demand curve shifted to the left

29
Q

what would a decrease in the price of a complement for a good look like on a graph

A

demand curve shifted to the right

30
Q

what would an increase in income if a good is
considered inferior on a graph

A

demand curve shifted left

31
Q

what would a decrease in income if a good is
considered inferior on a graph

A

a demand curve shifted to the right

32
Q

what would an increase in the population of the group of people likely to buy a good on a graph

A

a demand curve shifted to the right

33
Q

what would a decrease in the population of the group of people likely to buy a good on a graph

A

a demand curve shifted to the left

34
Q

what would an increase in an excise tax on a
good where the excise tax is paid by the consumer on a graph

A

demand curve shifted to the left

35
Q

what would a decrease in an excise tax on a
good where the excise tax is paid by the consumer on a graph

A

demand curve shifted to the right

36
Q

what would an increase in a subsidy on a good where the subsidy is paid to the consumer on a graph

A

demand curve shifted to the right

37
Q

what would a decrease in a subsidy on a good where the subsidy is paid to the consumer on a graph

A

demand curve shifted to the left

38
Q

what would an increase in technology in the
market for anything on a graph

A

supply curve shifted to the right

39
Q

what would a decrease in technology in the
market for anything on a graph

A

supply curve shifted to the left

40
Q

what would an increase in the price of an input in the market for anything on a graph

A

supply curve shifted to the left

41
Q

what would a decrease in the price of an input in the market for anything on a graph

A

supply curve shifted to the right

42
Q

what would an increase in the number of sellers in the market for anything on a graph

A

supply curve shifted to the right

43
Q

what would a decrease in the number of sellers in the market for anything on a graph

A

supply curve shifted to the left

44
Q

If two goods can be made with essentially the same inputs, show on a supply and demand diagram the result of an increase in the price of one on the market for the other on a graph

A

supply curve shifted to the left

45
Q

If two goods can be made with essentially the same inputs, show on a supply and demand diagram the result of a decrease in the price of one on the market for the other on a graph

A

supply curve shifted to the right

46
Q

what would an increase in an excise tax on a
good where the excise tax is paid by the producer on a graph

A

supply curve shifted to the left

47
Q

what would a decrease in an excise tax on a
good where the excise tax is paid by the producer on a graph

A

supply curve shifted to the right

48
Q

what would an increase in a subsidy on a good where the subsidy is paid to the produce on a graph

A

supply curve shifted to the right

49
Q

what would a decrease in a subsidy on a good where the subsidy is paid to the produce on a graph

A

supply curve shifted to the left

50
Q

show a supply and demand diagram the result of an increase in income

A

demand shifted right labeled normal good
demand shifted left labeled inferior good

51
Q

19Show on a supply and demand diagram the result of an increase in the price of one good in the market for another good

A

demand shifted right labeled substitute
demand shifted left labeled complement
supply shifted left labeled input and alternative output

52
Q

Show on a supply and demand diagram the result of a decrease in income on a supply and demand diagram

A

demand shifted left labeled normal good
demand shifted right labeled inferior good

53
Q

Show on a supply and demand diagram the result of a decrease in the price of one good in the market for another good

A

demand shifted left labeled substitute
demand shifted right labeled complement
supply shifted right labeled input and alternative output

54
Q

Show on a supply and demand diagram the result of an increase in the expected future
price

A

demand shifting right as supply shifts left

55
Q

Show on a supply and demand diagram the result of a decrease in the expected future price

A

demand shifting left as supply shifts right

fall 2024 (9 decks)

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