Brainscape's Knowledge GenomeTM

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


See full index

MICROECONOMICS CARDS > Economic methodology and the economic problem > Flashcards

Economic methodology and the economic problem Flashcards

1
Q

positive statements are

A

objective, tested with factual evidence

look for will

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

normative statements are

A

based on value judgements, opinion rather than fact

look for should

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

economic resources are

A

land, labour, capital, enterprise

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

opportunity cost

A

of a choice is the next best alternative forgone

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

law of diminishing returns

A

states that opportunity cost of producing x, leads to a fall in prod for y

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

capital goods are

A

goods to produce other goods

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

consumer goods

A

goods that cant produce other goods, jeans

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

allocative efficiency

A

One cant be much better off without making someone worse off

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

Demand =

A

quantity of good or service that consumers are willing to buy at a given price at period of time

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

Factors that shift demand

A

pirates

population
income
related goods
advertising
trends
expectations
season
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Law of diminising marginal utility states

A

as extra good is consumed , marginal benefit decreases so consumer willing to pay less

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

PED

A

percentage change in qd /percentage change in price

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

PED ELASTIC

A

PED >1

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

PED INELASTIC

A

PED <1

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

PED unitary elastic

A

PED = 1

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

PED perfectly inelastic

A

PED = 0

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

PED perfectly elastic

A

PED = infinity

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

when ped = negative -

A

elastic

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

Factors influencing ped (trains)

A

Necessity
substitutes
adictiveness
Peak off peak

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

in the LR ..

A

consumers have time to find substitutes = elastic

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

in the sr

A

consumer no time = . inelastic

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

taxes shift

A

curve supply !

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

subsidy

A

is a payment from government to firm to encourage prod of good and lower ac

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

TR

A

P X Q

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

inelastic demand =

A

firm raise price, quantity sold doesnt fall, increase in total revenue

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

elastic demand =

A

firm raise price, qs fall, decrease tr

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

YED =

A

%CHANGE in QD/ %CHANGE IN INCOME

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

complementary goods have a

A

-XED

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

close complements, when price falls small good X

A

small fall in price of good X leads to a large increase in QD of good Y

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

weak complements, when large fall in price

A

large fall in price of good X leads to only small increase in good QD of good Y

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

inferior goods fall in demand when

A

incomes rise

YED <0

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

normal goods as income

A

rises demand rises

YED > 0

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

luxury goods as income

A

rise, QD RISEEEEEE

YED > 1

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

XED =

A

%CHANGE IN QD OF GOOD X/ %CHANGE OF PRICE OF GOOD Y

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

Close substitutes when price increase

A

small increase in p of X

leads to big increase in QD of Y

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

weak substitutes,,

A

the opposite as close

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

unrelated goods have a XED OF

A

XED = 0

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

Dervived demand =

A

demand for x linked to y

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

composite demand =

A

good more than 1 use

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

joint demand

A

good bought together

41
Q

joint supply

A

increase in supply of x , decrease of supply of y

42
Q

production =

A

output per worker per given time

43
Q

specialisation =

A

when worker does one specific job in production process

44
Q

adv of specilasation

A

higher output + quality

45
Q

dis of specialisation

A

worker becomes repetitive less motivates

46
Q

absolute advantage

A

when a country can produce more of a good with same units of inputs

47
Q

in SR factors of prod

A

cannon change

48
Q

in LR factors of prod

A

can change, all costs variable

49
Q

fixed costs :

A

costs that do not vary with output

50
Q

variable costs:

A

costs that do vary

51
Q

TOTAL COST:

A

total variable cost + total fixed cost

52
Q

average cost

A

ac = total cost / quantity produced

53
Q

internal economies of scale =

A

firm becomes bigger, ac of production fall as output increases

54
Q

REALLY FUN MUMS TRY MAKING PIES

for economies of scale, benefit of having big firm

A 
risk bearing 
financial
managerial
technological
marketing
purchasing
55
Q

external economies of scale occur when

A

gov builds roads / better school

56
Q

diseconomies of scale can happen when

A

C C C

CONTROL
COMMUNICATION
COORDINATION

57
Q

TR =

A

P X QS

58
Q

AR =

A

TR / QS

59
Q

Profit

A

= TR - TC

60
Q

Firms break even when

A

tc = tr

61
Q

max profit is

A

mc = mr

62
Q

plc’s want..

A

max profit to make investors happy

so their goals are to max short term profit

63
Q

objective of firms

A

survival
growth
increase market share

64
Q

other objectives of firms

A 
society 
environmental
ethical
managerial
worker happiness
65
Q

pure monopoly is

A

sole seller in market

66
Q

when a monopoly raises price

A

output fall from q1 to q2, lead to producer surplus

67
Q

three main factors of market mechanism

A

rationing
incentive
signalling

68
Q

market failure occurs when

A

there is a misallocation of resources

69
Q

types of market failure

A

monopoly
info gap
underprovision of public good
externality

70
Q

complete market failure

A

missing market

71
Q

partial market failure

A

market is there just wrong price + quantity

72
Q

public good

A

non excludable , non rival

73
Q

private

A

excludable rival

74
Q

quasi

A

both pub + priv

75
Q

negative externalities can be caused by

A

demerit good

76
Q

positive externalities can be caused by

A

merit good

77
Q

symmetric info

A

means perfect info for producers + consum to make decision

78
Q

asymmetric info

A

means market failure, misinfo

79
Q

imperfect info

A

no info

80
Q

mobility of labour

A

how easy to switch jobs

81
Q

frictional

A

when changing jobsb

82
Q

structural

A

decline in industry (coal)

83
Q

geographical

A

family ties, social

84
Q

occupational

A

labour workers dont have the skills needed

85
Q

income =

A

flow of money

86
Q

wealth =

A

flow of assets

87
Q

indirect tax

A

tax on expenditure, increases production cost so producers supply less

88
Q

two types of indirect tax

A

ad valorem; taxes as a % such as VAT

specific set taxes per unit (petrol)

89
Q

valorem tax producers pay

A

p1-p2

90
Q

valorem tax consumers pay

A

p3-p1

91
Q

specific taxes are

A

set taxes per unit (petrol)

92
Q

more elastic demand (tax)

A

higher burden of consumers less producers

93
Q

if tax = external cost

A

then supply curve becomes msc rather than mpc

polluters pay damage

94
Q

subsidy

A

payment from gov to producer, lower costs make more

95
Q

price max graph where is price

A

at the top

96
Q

for price max, free market is in equilibrium when

A

p1, q1

97
Q

gov set a min price to

A

discourage

98
Q

when gov fail at entering a market it results in

A

net welfare loss to society

99
Q

causes of gov failure

A

distortion of price signals
unintended consequences
excessive administrative costs
info gap

MICROECONOMICS CARDS (1 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions