Labor and Financial Markets

Question 1

Economy at equilibrium-

Answer 1

Everyone can find job at the wage they want.

Question 2

In financial capital market-

Answer 2

Household and firm can be on either side of the market.

Question 3

Price elasticity-

Answer 3

Ratio btwn % change in quantity demanded and change in price.

Elasticity lowers in short run than in long run.

Question 4

Elastic demand and Elastic supply-

Answer 4

If elasticity is greater than 1- high responsiveness.

Question 5

Infinite or Perfect Elasticity-

Answer 5

Cases where either quantity or supply changes by an infinite amount to response to price changing.

Question 6

Constant unitary elasticity-

Answer 6

Price change of 1% result in quantity change of 1%.

Question 7

Cross price Elasticity of Demand-

Answer 7

Price of 1 good is affecting demand of a different good.

Question 8

Backward bending supply curve for labor-

Answer 8

People earn so much that they respond by working fewer hours.

Question 9

Saving in different classes-

Answer 9

Saving per person in the U.S decline recently. Middle class find it flexible to put money in saving account, poor family struggle to keep food on the table.

Question 10

Individual Retirement Account (IRA) and 401K

Answer 10

Special saving accounts where money going into account is not taxes until it taken out years later.

Question 11

Behavioral economics-

Answer 11

Seeks to enrich the understanding of decision making.

Question 12

Loss aversion-

Answer 12

Where $1 loss pain us 2.25 times more than $1 gain.