Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Economics 202 > ECON Exam 1 Ch. 10, 3, 4, 5 > Flashcards

ECON Exam 1 Ch. 10, 3, 4, 5 Flashcards

1
Q

Demand

A

relationship showing the various quantities that buyers are willing and able to purchase at different possible prices during some period when all else is constant

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

3 ways to express demand

A

table
graph
equation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

demand equation

A

30-5P

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Law of Demand

A

price and quantity demanded are inversely related. As price rises, the quantity demanded of the product will decrease

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Explanations for the Law of Demand

A

common sense
substitution effect & income effect
maximize utility

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Substitution Effect

A

willingness to buy is effected. The change in quantity demanded of a good that results from a change in price, making the good more or less expensive relative to other goods that are substitutes.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Income effect

A

ability to buy is altered. The change in quantity demanded of a good that results from the effect of a change int he goods price on consumer purchasing power

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Ceteris Paribus Condition

A

“all else equal” The requirement that when analyzing a relationship between two variables such as price and quantity demanded, all else must be held constant

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Change in quantity demanded

A

movement along the same demand curve. Can only be caused by a change in that products own price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Change in demand

A

shift in the entire demand curve left(decrease) or right(increase) caused by some factor other than that products own price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Things that cause demand to shift

A 
income
prices of related goods
consumer taste or preferences
population
expectations of consumers
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Income

A

two types of goods: normal and inferior
normal-a good which demand increases as income rises.
inferior-a good which demand increases as income falls

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Price of Related Goods

A

substitutes-price of one good increases, demand for the other will increase
complementary-price of a complement decreases, demand for the other will increase

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Consumer taste or preferences

A

taste increases, demand for that product will increase

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Population

A

As population increases, the demand for most products will increase

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Expectations of consumers

A

if consumers expect the future price of a good to decrease, then demand now for that product will decrease.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

3 ways to express Supply

A

Table(schedule)
Graph(curve)
equation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

supply equation

A

=+5P

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Law of Supply

A

There is a positive relationship between price and quantity supplied. Price increases quantity supplied increases too

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Change in Quantity Supplied

A

movement along the same supply curve caused by a change in that products own price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Change in Supply

A

shift in the entire supply curve left(decrease) or right(increase), caused by some factor other than that products own price

22
Q

Things that cause a change in supply

A 
input prices
technology
govt taxes, subsides, regulations
prices of substitutes in production
# of sellers
expectations held by sellers
23
Q

input prices

A

if the price of a good used to make a good rises, then the number of goods a seller is able to make decreases so supply will decrease. also wages paid by sellers to their employees

24
Q

Technology

A

Productivity
a positive or negative change in the ability of a firm to produce a given level of output with a given quantity of inputs

25
Q

Prices of substitutes in production

A

alternative products a firm could produce. if price of a substitute in a firm rises, that firm will focus on producing more of that substitute and then there will be less of the other good that are now being sold at a lower price and supply will shift left

26
Q

Number of sellers

A

when new firms enter the market, the supply curve will shift to the right. when existing firms leave the market, the supply curve will shift to the left

27
Q

Expectations held by sellers

A

if a firm expects the price of its good will be higher in the future than it is today, it has an incentive to decrease supply now and increase it in the future

28
Q

Market equilibrium

A

where the quantity demanded = quantity supplied

29
Q

surplus

A

where the quantity supplied is greater than the quantity demanded

30
Q

shortage

A

quantity demanded is greater than the quantity supplied

31
Q

Utility

A

the enjoyment or satisfaction people receive from consuming goods and services

32
Q

Util

A

pretend unit of satisfaction

33
Q

Marginal Utility

A

the change in total utility a person receives from consuming one additional unit of a good or service.
=change in TU/change in Q

34
Q

Law of Diminishing Marginal Utility

A

consumers experience diminishing additional satisfaction as they consume more of a good or service during a given period of time

35
Q

Budget Constraint

A

the limited amount of income available to consumers to spend on goods and services

36
Q

Utility Maximizing Rule

A

equal bang for your buck

MU1/P1=MU2/P2

37
Q

Derivation of the Law of Demand

A

MU1/P1=MU2/P2, then let P1 fall and we now have MU1/P1>MU2/P2 so you will buy more of good 1

38
Q

Consumer Surplus

A

The difference between what a consumer is willing to pay and what is actually being paid.

39
Q

CS on a graph

A

area under the demand curve and above the price line

40
Q

Marginal benefit

A

the additional benefit to a consumer from consuming one more unit of a good or service

41
Q

Producer surplus

A

the difference between what a seller receives and what they were willing to accept

42
Q

PS on a graph

A

area above the supply curve and below the price line

43
Q

Marginal cost

A

the additional cost of to a firm of producing one more unit of a good or service

44
Q

summation of marginal costs

A

area under the supply curve

45
Q

Economic Surplus

A

the sum of consumer surplus and producer surplus

46
Q

Deadweight Loss (DWL)

A

the reduction in economic surplus resulting from a market not being in competitive equilibrium

47
Q

Price floor

A

a legal minimum below which the market is not permitted

Agricultural and Minimum Wage

48
Q

Price ceiling

A

a legal max above which the market is not permitted

Rent Controls

49
Q

Economic impact of Taxes

A

each tax must have a base and rate

50
Q

base

A

general-hits almost everything

selective-gas, cigs, booze

51
Q

rate

A

ad valorem-at value

specific-per unit

Economics 202 (2 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions