economics Flashcards
Who was more information in the principal-agent problem?
Agents have asymmetric information over the principal such as shops and customers.
What reduces asymmetric information?
The internet reduces Asymmetric information as customers can compare products between businesses allowing for clearer information for the consumer.
What are the characteristics of perfect competition?
many firms, unrestricted, homogenous, cabbage, horizontal (price taker).
What are the characteristics of monopolistic competition?
many/several, unrestricted, differentiation, restaurants, downward slopping.
What are the characteristics of oligopolies?
few, restricted, undifferentiated, or differentiated, supermarket, downward slopping, and elastic.
What are the characteristics of monopolies?
one, restricted, unique, local water, downward sloping.
advantage and disadvantage of free trade?
For exporters, domestic producers of the good are better off, and domestic consumers of the
good are worse off. Trade raises the economic well-being of the nation.
For importers, domestic producers of the good are worse off, and domestic consumers of the good are better off.
Trade raises the economic well-being of a nation as a whole because the gains of consumers exceed the losses of producers.
The formula for PED?
(QD2-QD1)/((QD2+QD1)/2)) / ((P2-P1)/((P2+P1)/2)
Is supply elastic in the short or the long run
Over the long-run, supply becomes more elastic, because suppliers can take actions that
take more time to increase the supply, such as building new factories
What happens if demand is greater than supply in the labour market?
There is a shortage leading to an increase in wages and more workers are incentivised to work in the market.
What are the factors of production?
Land, labour, and capital.
What is asymmetric information?
when one party has more information than another.
What is the principal-agent problem?
When the agents of a business (managers) don’t act in the best interest of principals (shareholders).
