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Microeconomics > L1 > Flashcards

L1 Flashcards

1
Q

What is microeconomics about

A

How to analyze business choices given limited resources.

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2
Q

What does microeconomics allow us to do

A

Make predictions about future choices and decisions, compare observations to theories and make nominative judgements

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3
Q

What is industrial organization

A

The study of strategies and behaviors of firms in a market or industry

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4
Q

What is environmental economics

A

The study of how regulation affects the market impact on the environment

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5
Q

What is development evonomics

A

The study of developing economies

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6
Q

What is health economics

A

The study of the healthcare industry

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7
Q

What is market equalibrium

A

When the supply quantity matches what is demanded

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8
Q

What is the equilibrium price

A

The price if goods n market equilibrium

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9
Q

What is the equilibrium quantity in micro economics

A

The quantity sold in market equalibrium

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10
Q

What drives markets toward equilibrium

A

Excess demand pushing prices up and excess supply driving down prices

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11
Q

What determines the amount that prices purchased for and quantity supplied change upon excess supply or demand in the supply demand model

A

The slope of the supply or demand curve

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12
Q

What is elasticity in microeconomics

A

The measure if how demand changes given other changes measured in percent

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13
Q

What foes it mean that the price elasticity of demand often is negative

A

An increase in prices reflect negatively on demand, the graphs are negatively correlated

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14
Q

What influences the price elasticity of demand

A

Available substitutes makes demand more elastic but a smaller budget share makes it inelastic. Increased time makes demand more elastic and the type of good also has an effect

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15
Q

How can you see if demand is elastic

A

If the absolute percentage change is demand is greater than the absolute percentage change in price

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16
Q

What does perfect inelastic demand mean

A

That prices are never affected by demand

17
Q

What dies perfectly elastic demand mean

A

That even the smallest change in price will make demand disappear completely

18
Q

What is unitary elasticity

A

One to one negative relationship as elasticity is equal to -1

19
Q

What defines a luxury good

A

Goods with an income elasticity greater than one that are bought steeply less if when income decreases

20
Q

What is the income elasticity of inferior and normal goods

A

Inferior goods have a negative elasticities and normal have an elasticity between 0 and 1

21
Q

What does it mean that the cross price elasticity of demand is positive

A

An increased price for one good increases demand for a substitute

22
Q

What if cross price elasticity of demand is negative

A

If prices of one good increase it decreases demand for another complement good

Microeconomics (21 decks)

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