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ECON 302 > final > Flashcards

final Flashcards

1
Q

Utility Maximization is when:

A

Budget line tangent to maximum indifference curve

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2
Q

Market Rate of substitution definition

A

Rate at which one good can be exchanged for another at current prices

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3
Q

Negative of slope of budget line

A

Market Rate of Substitution

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4
Q

The larger the % of a budget a good takes, the ____ elastic

A

More

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5
Q

Constant MRS has a slope of

A

-1

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6
Q

Shift of budget line for income change

A

Parallel

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7
Q

Shift of budget line for price change

A

individual intercept changes

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8
Q

The demand curve is more elastic at the:

A

Top, left of the curve

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9
Q

The demand curve is more inelastic at the:

A

Bottom, right of the curve

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10
Q

Elasticity along segments is:

A

Arc elasticity

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11
Q

Elasticity at a point (with value given for price)

A

Point elasticity

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12
Q

Positive Income Elasticity

A

Normal Good

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13
Q

Negative Income Elasticity

A

Inferior Good

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14
Q

Positive Cross Price Elasticity

A

Substitute Goods

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15
Q

Negative Cross Price Elasticity

A

Complements

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16
Q

Elasticity formula you forgot

A

Q/P

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17
Q

If the absolute value of the elasticity is greater than 1,

A

Elastic

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18
Q

Abs value of elasticity is infinite

A

Perfectly Elastic

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19
Q

Abs value of elasticity is zero

A

Perfectly Inelastic

20
Q

If income falls enough,

A

Everything is a normal good

21
Q

Four assumptions of well behaved indifference curves

A

Completeness, more is better, diminishing MRS, transitivity

22
Q

Negative of slope of indifference curve

A

MRS

23
Q

MRS definition

A

Rate at which a customer is willing to substitute one good for another

24
Q

Substitution Effect

A

Comp-old

25
Q

Income effect

A

New-comp

26
Q

Consumer spends entire budget on one good

A

Corner Solution

27
Q

If MRS is constant, goods are

A

Perfect Substitutes

28
Q

Prince consumption curve slopes up

A

Complements

29
Q

Prince consumption curve slopes down

A

Substitutes

30
Q

Income consumption curve slopes up

A

Normal

31
Q

Income consumption curve slopes down

A

Inferior

32
Q

Substitution Effect (graphically)

A

Change in Slope

33
Q

Income Effect (graphically)

A

New indifference curve w/ parallel budget line shift

34
Q

Uncompensated Price Change

A

Price change with no income change

35
Q

Compensated Price Change

A

Price and income changes, leaving utility unaffected

36
Q

Substitution Effect

A

Change in consumption resulting from a change in relative prices

37
Q

Income effect

A

Change in consumption resulting from a change in purchasing power

38
Q

If good is inferior, ___ dominates ___

A

Income effect, substitution effect

39
Q

Characteristics of Giffen Goods

A

Inferior, no close substitutes, large percentage of budget

40
Q

Production

A

Transforming productive inputs into products of greater value

41
Q

Production Function

A

Max amount of output that can be produced with a given set of inputs

42
Q

MPL

A

First derivative of total product

43
Q

Synergy ___ be true, diminishing marginal returns is ___ true

A

May, always

44
Q

Increasing marginal returns wherever

A

MP > AP

45
Q

For an inferior good, price falling means the substitution effect results in the person buying ___ of a good

A

MORE

46
Q
A

ECON 302 (1 decks)

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