Entire Class Study Guide Econ 110 Flashcards
What are the 4 properties of how people behave
- people face trade offs
- opportunity costs
- marginal analysis
- people respond to incentives
What are 2 ways people interact in markets
- gains from trade
- property rights
What is the reason for the role of government and property rights in markets?
- reasons to intervene, market failures (not reaching equilibrium), and inequality
Movement along the supply curve is caused by
a change in price
What else can shift a Demand Curve?
Future price expectations and non price factors
When market points are functioning under equilibrium, there is a
shortage
shortages without price ceilings are
temporary
If Supply shifts right and demand shifts left what happens to P and Q
Price goes down, equilibrium quantity stays the same
What is elasticity of demand?
How much P&Q respond to an events
Examples of Inelastic Goods
insulin, gasoline, utilities,
Examples of Elastic Goods
coffee, mobile phones, automobiles
Inelastic goods are affected more by
a change in price
Elastic goods are affected more by what
a change in quantity
a PED below 1 is
inelastic
a PED above 1 is
elastic
A PED at 1 is
unit elastic
Total Surplus =
consumer surplus + producer surplus
Which surplus is above the equilibrium price
consumer
Which surplus is below the equilibrium price
producer
If Supply decreases in an inelastic market, what happens to CS, PS, and TS
CS goes down, PS rises, and TS rises
If Demand increases in an elastic market, what happens to CS, PS , and TS
CS is ambiguous, PS rises, and TS rises
