economics 151-225 Flashcards
what happens to the equilibrium price of a good if there is an increase in demand ceteris paribus
the price increases
what is the market supply of a good
the sum of individual supply for each supplier in a market
what happens to the exchange quantity of a good if there is an increase in supply ceteris paribus
the exchange quantity increases
what is the market clearing price of a good
the equilibrium price
the upward slope of the supply curve is explained by the law of increasing marginal…
cost
you can sell 10 hockey pucks at $5 each or 9 hockey pucks at $6 each. Calculate the PED
10% change in quantity demanded/20% change in price PED=1/2=.5
income elasticity of demand measures…
responsiveness of demand to consumer income
cross elasticity of demand measures
responsiveness of demand for a good to the price of complimentary and substitute goods
if price elasticity of demand is equal to one, the demand is…
unit elastic
if price elasticity of demand is equal to zero, then demand is…
this
what is the most important resource market in the us
the labor market
how do most economists feels about free trade
most economists support free trade
what happens to the total consumption possibilities for two nations that specialize according to their comparative advantages and then trade
total possible consumption increases
what is barter
the exchange of resources goods or services without using money
how did japan achieve rapid economic growth in the 1970s and 1980s
by training its workforce well and by applying technology
what do we use to avoid the inefficiency of a barter system
money or any other medium of exchange
what is a market
a mechanism that brings buyers and seller together for the purpose of making an exchange
what is division of labor
the act of dividing the production of a good into simple separate tasks
what is fiat money
a form of money that is only valuable as a medium of exchange not as a commodity and only because people believe the issuing government can back its value
what kind of money s paper currency
fiat money
what happens to the quantity demanded of a good as the price increases
quantity demanded decreases
what happens to the equilibrium price of a good if there is an increase in supply, ceteris paribus
the price decreases
what is demand
the relationship between the price of a good and the quantity of it that consumers are willing and able to buy
how is quantity supplied related to supply
supply is the quantity supplied at each possible price within a range of prices
what happens to exchange quantity if there is a simultaneous increase in demand and decrease in supply
we cannot tell exactly
what happens to the quantity demanded of a good as the price decreases
quantity demanded increases
why is the equilibrium price of a good sometimes called the market clearing price
because when there is an equal number of buyers and sellers, the market is said to clear
what happens to the equilibrium price of a good if there is a decrease in demand, ceteris paribus
the price decreases
what is quantity demanded
the quantity of a good that consumers are willing and able to buy at a particular price
what are of economics explores the individuals preference for a particular good
microeconomics
what is the term for a situation in which resources, goods, or services are exchanged
market
how are two boys trading baseball cards an example of a market
they are exchanging goods
what happens to equilibrium price when there is a simultaneous decrease in demand and increase in supply
equilibrium price decreases
what happens to equilibrium price if there is a simultaneous increase in both supply and demand
we cannot tell oops
what is the equilibrium quantity of a good or service
the quantity at which sellers ask the price that buyers are willing to spend
what happens to equilibrium price if there is a simultaneous increase in demand and decrease in supply
equilibrium price increases
what area of economics explores the behavior of individual producers and consumers
microeconomics
what happens to exchange quantity if there is a decrease in supply
exchange quantity decreases
what area of economics explores the components and behaviors of individual markets
microeconomics
how does a market system eliminate the need for buyers and sellers to negotiate over every individual change
with a price system
what is individual supply of a good
the supply of an individual producer
what is individual demand
the demand of one consumer for a good
quantity supplied increases as price increases because higher prices provide a (positive/ negative) incentive for producers
positive
if five dollars are worth two franc, then the ____ rate is 2.5 to 1
exchange
specialization in trade result in (increased/decreased) production
increased
when people specialize, how do they satisfy their wants and needs for goods and services they do not produce?
trade
specialization (increased /decreases) efficiency
increases
specialization (increases /decreases) dependence on the self-intrest of others.
they become interdependent
when individuals specialize, what must they do to satisfy their wants
trade
are the workers in an assembly line independent or interdependent?
interdependent
what term refers to any situation in which goods, services, or resources are exchanged?
a market
trading is simpler with money than with a better system because bartering requires a “double _____ of wants”
coincidence
what is the economic term for goods that are produced in a foreign country and purchased by domestic consumers?
imports
people tend to specialize in goods in which they have (an absolute advantage/a comparative advantage)
a comparative advantage
tim can write more flashcards per hour than sam can. Does tim have an absolute or a comparative advantage in flashcards?
Absolute (he many have a comparative advantage as well, but there is not enough information in the question to determine this)
Specialization and trade result in (increased/decreased) consumption
increased
specialization leads to (interdependence/independence)
interdependence
what is required for specialization to occur?
voluntary exchange
who experiences a greater level of interdependence: “jack-of-all-trades” or a specialist?
specialist
which is likely to require the most education and skill: division of labor or specialization?
specialization
what component of a market economy allows producers to specialize?
voluntary exchange
producers tend to specialize in the good or service that they can produce at the lowest _____ cost
opportunity
what is the economic term for good that are produced domestically and sold to consumers in another country
exports
t/f: barter requires fewer transactions than trade with the use of money?
TRUE
What is the term for the unique type of specialization that occurs in an assembly line?
division of labor
international trade occurs when one country produces a product and (imports/exports) it to another country
exports
What is required for voluntary exchange to occur?
al participating parties must expect to benefit from the exchange
t/f: people desire money for its intrinsic value.
FALSE
tariffs and quotas are examples of barriers to _____.
trade
what term refers to the trade of one good directly for another, without the use of money?
barter
A negative cross elasticity of demand tells us that two goods are (complements/substitutes).
complements
A positive cross elasticity of demand tells us that two goods are (complements/substitutes).
substitutes
Ticket prices go up at Clippers games, and overall ticket revenue increases at the Staples Center. This means that demand in this price range is _____.
inelastic
Prices increase on Daewoo automobiles, and quantity demanded plunges to zero. Demand in this price range is _____.
perfectly elastic
”% change in quantity divided by % change in price” is the generic formula for ________.
price elasticity of demand
