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Mac- Freshman Year- Spring Semester > Econ Test #1 > Flashcards

Econ Test #1 Flashcards

1
Q

increase in income leads to less of one product

A

inferior good

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2
Q

important to include for “if then statements” when applicable

A

substitubes vs compliments or inferior vs. normal

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3
Q

What is a point that is below ppf

A

innefficient use of resources

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4
Q

What is a point above ppf

A

infeasible

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5
Q

what is a point on ppf

A

efficient points

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6
Q

what happens when ppf moves on one axis

A

sectoral shift

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7
Q

what happens when ppf moves both axis (line stays parallel i think)

A

economy wide shift

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8
Q

budget contraint

A

the line. ppf. yeah

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9
Q

How do you find opportunity cost in a graph

A

the slope

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10
Q

shift in demand (how to show on graph)

A

demand line moves

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11
Q

diminishing marginal product

A

when time goes on, this can happen (marginal cost goes up)

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12
Q

perfectly competitive market

A

homogenous products.MANY SELLERSin extreme, the products are identical and perfect substitutes

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13
Q

cost vs price

A

cost is what producers pay. cost is what consumers pay

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14
Q

cost-benefit principle

A

identifying the costs and beneifts and pursing that of which the beneifts outweigh costs

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15
Q

economic surplus

A

total benefits - total costs. shows how much a decision has improved well-being

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16
Q

opportunity costs

A

the true cost of something is the next best alternative you have to give up to get it

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17
Q

production possibility frontier

A

shows the different sets of output that are attainable with your scarce resources

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18
Q

marginal principle

A

decisions about quantities should be made in increments. break it into marginal costs and benefits

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19
Q

marginal costs

A

the extra cost from one extra unit (so I don’t think this includes fixed costs)

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20
Q

rational rule

A

if something is worth doing, keep doing it until mb=mc

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21
Q

individual demand curve

A

a graph plotting the quantity of an item that someone plants to buy at each price

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22
Q

rational rule for buys

A

buy more of an item if the mb of 1 more is greater than or equal to the price

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23
Q

individual supply curve

A

a graph plotting the quantity of an item that a business plans to sell at each price

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24
Q

law of supply

A

tendency for quantitiy supplied to be higher when price is higher

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25
Q

diminishing marginal benefit

A

each additional item yields a smaller MB than the previous item

26
Q

marginal product

A

the increase in output that arises from an additional unity of input (like labor)

27
Q

planned economy

A

basically communism. centralized decisions are made about what is produced, how, by who, etc.

28
Q

market economy

A

each individual makes their own production and consumption deciosns buying and selling

29
Q

market

A

a setting bringing together potential buyers and sellers

30
Q

equilibrium

A

when quantity supplies is equal to quatntity demanded

31
Q

shifters of demand

A
  • preferences
  • expectations
    -income
    -type and # of buyers
  • price of related goods
32
Q

shifters of supplies

A
  • type + # of sellers
  • expectations
  • input prices
  • productivity
  • prices of other products sellers could do/make
33
Q

price elasticity of demand def

A

a measure of how responsive buyers are to price changes

34
Q

price elasticity of demand equation

A

(%change in Q demanded)/(%change in P)

35
Q

price elasticity of demand measuring

A

-1 < ED<1 = inelastic

36
Q

total revenue equation

A

price x quantity

37
Q

income elasticity of demand def

A

a measure in how responsive the demand for a good is to changes in income

38
Q

income elasticity of demand equation

A

(%change in Q demanded)/(%change in income)

39
Q

income elasticity of demand measuring

A

if negative= inferior goods , if positive = normal good

40
Q

price elasticity of supply def

A

a measure of how responsive sellers are to price changes

41
Q

price elasticity of supply equation

A

(%change in Q supplied)/(%change in P)

42
Q

price elasticity of supply measuring

A

always positive

43
Q

what will a perfectly inelastic look like

A

vertical

44
Q

to find %change

A

midpoint formula : (Second x - first x) / (( Second X+ first x)/2)

45
Q

price ceiling

A

maximum price sellers can charge

46
Q

price floor

A

minimum price sellers can charge

47
Q

binding price floor/ceiling

A

prevents hitting equalibrium

48
Q

difference in differences

A

( treatment after P - Treatment before P) - ( control after P - control before P)

49
Q

What are the criteria for a control

A

control must trend in same direction and magnitude as treatment AND it must be unaffected by treatment

50
Q

economic surplus

A

total benefits minus total costs

51
Q

economic efficiency

A

market is more economically efficient if it yields more economic surplus

52
Q

efficient outcome

A

yields largest possible economic surplus

53
Q

consumer surplus

A

the economic surplus you get from buying something (MB-price)

54
Q

market failure

A

when the forces of supply and demand lead to an inefficient outcome

55
Q

producer surplus

A

economic surplus you get from selling something (price-MC)

56
Q

deadweight loss

A

how far economic surplus falls below efficient outcome ( economic surplus at efficient quantity)- (actual economic surplus)

57
Q

how to find deadweight in a graph

A

the triangle between equilibrium and actual number. Then just figure out area of the triangle

58
Q

government failure

A

when a government policy leads to worse outcomes

59
Q

Cross price elasticity of demand def

A

a measure of how responsive the demand of one good is to the price of another

60
Q

Cross price elasticity of demand equation

A

(%change in quantity demanded) / ( %change in price of another good)

61
Q

Cross price elasticity of demand measuring

A

if negative= compliments. If positive= substitutes

Mac- Freshman Year- Spring Semester (10 decks)

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