Economics Flashcards
Is a measurement of the responsiveness of a quantity demanded to change in price
Own-price elasticity
the sensitivity of quantity demanded to a change in income.
%change in Quantity demanded/%change in income
Income elasticity
Goods that that have a positive income elasticity . from an increase in income.
Normal Goods
An increases in income that leads to a decrease in Quaintly demanded.
Inferior Goods
the % change in the quantity demanded of a good to the % change in the price of a related good
Cross-Price Elasticity of Demand
An increase in price of a related good decreases demand for another good
Complements
eg: increase in car price leads to decrease in gas demand
When a price in a good decreases shifts spending towards more of this good
Substitution Effect
when the price of a good falls this and allows the consumer to use there money better else where
Income Effect
An inferior good for which the negative income effect outweighs the positive substitution effect when price falls
Giffen Good
A higher price makes the good more desirable
Veblen Good
What are the 4 factors of production
Land, Labor, Capital and Materials
when only considering the only two inputs as capital and labor
Production Function
when the quantity of labor for which the additional output for each additional worker begins to decline
Diminishing marginal productivity/Diminishing marginal returns
Firms that produce identical products, have low barriers to entry, many firms, and compete based off of price
Perfect Competition
Firms that produce products that differentiate from each other, have low barriers to entry, have good substitutes but are slightly different, compete using price marketing and product features
Monopolistic Competition
Few firms, high barrier to enter, very good subs but are differentiated, compete using price marketing and features, have some significant pricing power
Oligopoly
single frim that has very high barriers to enter. No good subs and compete using advertising. Has significant level of price power
Monopoly
Price is Greater than Cost. this difference is called?
Markup
The Practice of chagrging Different consumers different prices for the same product or service
Price Discrimination
The total market value of the goods and services produced in a country within a certain time period.
Gross Domestic Product (GDP)
what is the approach used to calculating GDP by summing the amounts spent on goods and services produced during the period
Expenditure approach
the calculation used for GDP by Summing the amounts earned by households and companies during the period
Income Approach
income received by all factors of production used in the creation of final output
National Income
pretax income received by households.
Personal income
