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Micro Economics > For Midterm (stuff You Have Trouble With) > Flashcards

For Midterm (stuff You Have Trouble With) Flashcards

1
Q

Price elasticity if substitute is what positive or negative

A

Positive

When calculating, make sure the initial quantity and price are correlating

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2
Q

Price elasticity of complement is what positive or negative

A

Negative

When calculating, make sure the initial quantity and price are correlating

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3
Q

The world faces a scarcity of ideas

Is it a proper way that economists think of scarcity?

A

Nah boy

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4
Q

What is the difference between a straight line PPF and one that is concave

A

Straight line: shows constant opportunity cost

Concave: does not show constant opportunity cost

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5
Q

Models used how and for what?

A

Shows exonomic relationships

Can be graphs

Can be equations

Its an abstraction of exonomy

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6
Q

The income elasticity of an inferior good is positive or negative

A

Negative

Make sure to put the initial and final quantity and prices properly

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7
Q

Income elasticity of normal good is positive or negative

A

Positive

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8
Q

What is the inefficiency of a price floor?

A

Extra cost of the last unit produced is greater than the extra benefit of last unit consumed

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9
Q

Of there is an external cost associated with a good, then how is the allocation of resources in production of the good

A

There is proper allocation of resources

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10
Q

How is the marginal rate of pollution reduction if more and more of the environment is cleaned up

A

It declines

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11
Q

Is the MR curve half of the Demand curve usually?

A

Yeee boyyy

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12
Q

What is the difference between having MR = MC and MR = 0 in a monopoly

A

MC = MR is the optimal output for max profits

MR = 0 is to max revenue

When MR = 0 is when TR hits max

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13
Q

Is the MR curve half of the Demand curve usually?

A

Yeee boyyy

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14
Q

What is the difference between having MR = MC and MR = 0 in a monopoly

A

MC = MR is the optimal output for max profits

MR = 0 is to max revenue

When MR = 0 is when TR hits max

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15
Q

what makes collusion harder

A

if there are many firms in the industry

if the product is not standardized

if demand and cost conditions are changing rapidly

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16
Q

The demand curve slopes downward due to diminishing marginal utility

True or false?

A

True fam

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17
Q

In the short run, can a perfectly competitive firm vary their amount of workers and their size of firm?

A

Only the mount of workers can be varied

Not size of firm

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18
Q

Are fixed costs incurred even if nothing has been produced?

A

Yeee boyyy

19
Q

When MP exceeds average product

A

Marginal cost must be decreasing

They be using economies of scale

20
Q

When marginal costs increase while output also increases, what does this mean to the marginal product

A

The marginal product is decreasing

Less is produced per worker, hence the cost per unit increases

21
Q

Why does risk pooling decrease overall risk

A

Cause every risk is independent from the others

22
Q

How does techno improvement affect production produces

A

Extends increasing returns to scale portion in the long run of the average cost curve

23
Q

A perfectly competitive firm’s supply is:

A

Zero for all prices below the shutdown price

For all prices above shutdown price, its the curve above minimum average variable cost

24
Q

If MR exceed MC, gotta increase or decrease output

A

Increase output

MR is half the demand curve going downwards

MC goes up

25
Q

The greater the elasticity of demand, how is the consumer surplus?

A

The smaller will be the consumer surplus

26
Q

When does a market failure occur

A

When The price established in the market does not equate the marginal social benefit of a good and the marginal social cost of production

27
Q

MP = AP, what does it mean for AP

A

AP is at max

28
Q

Does MC = ATC when ATC is at minumum?

A

Yeee

29
Q

What are characteristics oligopolists

A

Produce more and sell at lower price than monopolist when do not collude

Marginal revenue = marginal cost

When colliding, they act as monopoly in output and price

30
Q

What is included in non tariff barriers

A

Quotas

Safety standards

Voluntary export restraints

31
Q

In the PERFECT COMPETITION

since the demand is elastic

That means that there is horizontal demand,

So the demand curve is equal to what?

A

D = P

D = MR

D = AR

MR = P

32
Q

In the perfect competition

Where should all firms produce?

(Short run)

A

Where MR = MC

33
Q

Why does a perfectly competitive firm want to produce where MR = MC?

(Short run)

A

Because if MC (which increases) exceed the MR (which is horizontal), the cost of each additional unit will be greater than the revenue of each additional unit

If MC is lower than MR, then they can still make more profits by producing more output till it gets to MR = MC

34
Q

In a graph, what is the total profit for a perfectly competitive firm?

(Short run)

A

Vertical distance between the point where MC = MR and the point at the same output where is equal to ATC

X

Horizontal distance of optimal output

Area should be a rectangle

35
Q

What happens to the total market supply curve when more firms enter a perfectly competitive industtry

A

The supply increases

It shifts to the right

Total market output increases and price decreases

36
Q

What happens to the demand of a singular firm in the long run

To their profits?

To their output?

Their P?

Their MR?

A

Their demand will decrease

It will shift down (it remains horizontal)

Since D = P, their price of sale will decrease

Their MR will also decrease

No more profits

Their output will decrease

MR curve will equal the minimum if the ATC curve (no more profits)

37
Q

True or false

Monopoly have unique goods with no subs??

A

True

38
Q

True or false

Monopoly are price takers??

A

False

They be price makers

39
Q

Can a monopoly price discriminate?

A

Nah boy

If they lower the price, they lower for everyone

40
Q

Profit maximizing Q in monopoly

A

MR = MC

41
Q

Profit max price in monopoly

A

MR = ATC

42
Q

Socially optimal output Q in monopoly

A

Where MC = D

43
Q

Dead wieght loss in monopoly

A

POINT where MC = MR

Price where MC = MR

Point where MC = D

44
Q

No economic profit in monopoly

A

ATC = D

Micro Economics (13 decks)

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