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ECON 1100 > Final Exam > Flashcards

Final Exam Flashcards

1
Q

positive economics

A

involves scientific predictions about economic relationships and addresses “ what is “

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2
Q

normative economics

A

involves value judgement and addresses “ what should be “.

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3
Q

fallacy of false cause

A

because one event followed another, the first event must have caused the second event.

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4
Q

fallacy of composition

A

if something is true for a part, it must also be true for the whole.

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5
Q

fallacy of division

A

what is good for the whole must also be good for parts of the whole.

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6
Q

sunk cost fallacy

A

what has already disappeared can somehow be regained through further investment of money, time, or effort.

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7
Q

law of increasing opportunity cost

A

in order to produce more of a good during a given time period, society must sacrifice increasing amounts of the other good because resources typically are not equally well-suited to producing different goods.

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8
Q

comparative advantage

A

the ability to produce a good at a lower opportunity cost compared to other producers.

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9
Q

normal good

A

a good for which income and demand are positively related.

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10
Q

inferior good

A

a good for which income and demand are negatively related.

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11
Q

law of demand

A

there is a negative or inverse relationship between the price of a good and the quantity demanded of that goof, ceteris paribus.

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12
Q

substitutes

A

good for which there is a positive relationship between the price of a gapped and the demand for some related good.

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13
Q

complements

A

goods for which there is a negative relationship between the price of a good and the demand of some related good.

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14
Q

non-price determinants of supply

A

technology, resource costs, acts of nature, number of sellers, producer expectations.

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15
Q

determinants of price elasticity of demand

A

the availability of good substitutes ( the greater the number of substitutes, the more elastic demand is. reverse for less substitutes ).

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16
Q

determinants of a shift in demand

A

changes in tastes are preferences, a change in income, a change in the price of a related good or service, a change in the number of buyers in the market, a change in the expectations of buyers.

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17
Q

price elasticity of demand

A

a measure of the change in the demand for a product in relation to a change in its price

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18
Q

inelastic demand

A

when an increase in price causes a relatively small decrease in the quantity demanded, the percentage change in price is less than 1

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19
Q

elastic supply

A

when an increase in price causes a relatively large decrease in the quantity demanded, the percentage change in price is greater than 1.

20
Q

unit elastic

A

the percentage change in quantity is equal to the percentage change in price (1).

21
Q

cross elasticity of demand

A

how sensitive the demand for a product is to changes in the price of another product.

22
Q

income elasticity of demand

A

the responsiveness of quantity demand to a change in income.

23
Q

protectionist policies

A

place specific restrictions on international trade for the benefit of a domestic economy.

24
Q

consumer surplus

A

the difference between the maximum price someone is willing to pay and the actual price they do pay.

25
Q

producer surplus

A

the difference between the market price and the minimum price a seller is willing to accept.

26
Q

marginal benefit

A

the additional benefit gained from consuming one more unit of a good ( demand ).

27
Q

marginal cost

A

the additional cost of producing more unit of good ( supply ).

28
Q

coase theorem

A

private bargaining brings about an efficient outcome as long as property rights are well defined and transaction costs are sufficiently low; furthermore, efficiency is achieved regardless of which party is granted property rights.

29
Q

private benefits

A

a benefit derived by an individual or firm directly involved in a transaction as either buyer or seller.

30
Q

social benefits

A

the total benefit to society from producing or consuming a good/service.

31
Q

long-run average cost ( LRAC ) curve

A

costs per unit decrease as output increases and doubling inputs will more than double your output.

32
Q

value of the marginal product ( VMP )

A

the additional revenue that is earned from hiring one more worker.

33
Q

perfect ( first-degree ) price discrimination

A

charging customers the maximum price that they are willing to pay for a good or service.

34
Q

price discrimination

A

a sales strategy of selling the same product or service to different customers for different prices.

35
Q

perfectly competitive model

A

a market structure made up of many small firms producing identical products.

36
Q

derived demand

A

the demand for a resource like labor depends on the demand for the product the resource helps to produce.

37
Q

oligopoly characteristics

A

some barriers to entry, mutual interdependence, and highly concentrated concentration ratio.

38
Q

marginal revenue ( MR )

A

the additional revenue earned from selling one more unit of output.

39
Q

law of diminishing marginal product

A

a situation in which total output increases at a diminishing rate when more of the variable factor is combined with the fixed factors of production.

40
Q

Nash equilibrium

A

the outcome reached by analyzing the payoff matrix to determine the best choice for each player assuming no collusion.

41
Q

game theory model

A

assumes that firms anticipate rival firms’ decisions when they make their own decisions.

42
Q

marginal product (MP)

A

the change in output as a result of one additional unit of input.

43
Q

marginal product of labor (MPL)

A

the change in the level of output when a new employee is hired, ceteris paribus.

44
Q

monopolistic competition

A

many companies are present in an industry, and they produce similar but differentiated products. zero barriers to entry, maximize profit by producing the quantity where MR = MC, so long as P > AVC.

45
Q

free market conditions

A

centralized economic interventions by government either do not exist or are minimal.

ECON 1100 (2 decks)

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