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Econ 102 > lessons 4 and 5 > Flashcards

lessons 4 and 5 Flashcards

for midterm 2

1
Q

What is comparative statics?

A

Studying ow supply and demand curves shift

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2
Q

what direction his an increase in demand and supply

A

increase = shift to the right

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3
Q

What direction is a decrease of supply and demand

A

decrease = shift to the left

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4
Q

What are the shifts of demand?

A

price, consumer taste, # of buyers, income, compliments, substitutes

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5
Q

what is an inferior good?

A

a good like ramen that when poor gets bought more but when incomes goes up it decreases

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6
Q

what is a normal good?

A

a good like steak that when poor gets bought less but when incomes goes it gets bought more.

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7
Q

What is elasticity?

A

A measure of the responsiveness of one variable to change in another variable

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8
Q

What’s is a substitute?

A

a good that performs similar function or satisfy a similar human desire.

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9
Q

What is a complement?

A

a good that are more valuable when consumed together.

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10
Q

What is cross-point elasticity of Demand?

A

The effect that a change in the price of one good has on the Demand for another good.

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11
Q

What are the shifts of the supply curve?

A

price, # of sellers, technology, input price, taxes and subsidies.

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12
Q

what do taxes do to suppliers.

A

shifts to the left because it takes away from the business profits.

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13
Q

what do subsides do to suppliers.

A

shifts to the right because it gives government money to the business.

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14
Q

what is the formula for elasticity?

A

Ey,x = percentage change of Y/ percentage change of X

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15
Q

what is the formula for own-price elasticity of demand?

A

the responsiveness of the quantity demand/ by the price of the good (will always be negative)

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16
Q

what is the formula for own-price elasticity of supply?

A

the responsiveness of the quantity supplied/ by the price of the good (will always be positive)

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17
Q

What do elasticity classifies as inelastic?

A

When the absolute value of a good’s price is less than 1

18
Q

What do elasticity classifies as elastic?

A

When the absolute value of a good’s price is greater than 1

19
Q

how do you calculate TR (total revenue)

A

TR = P * Q

20
Q

when |E|= 0 what does it classify as?

A

perfectly inelastic

21
Q

when |E|=∞, what does it classify as?

A

perfectly elastic

22
Q

what is the demand curve made up of?

A

the set of maximum buying prices.

23
Q

what is the supply curve made up of?

A

the set of minimum buying prices.

24
Q

What is consumer surplus?

A

the measure of the gain that the buyer experiences from an exchange.

25
Q

What is producer surplus?

A

The measure of the gain that the seller experiences from an exchange.

26
Q

What is the total gain from trade?

A

The sum of consumer and producer surplus.

27
Q

What is a shortage?

A

when the quantity supplied is lower than the quantity demanded.

28
Q

What is a surplus?

A

when the quantity demanded is lower than the quantity supplied.

29
Q

What is dead weight loss?

A

Gains from trade that are not being made

30
Q

What is economic efficiency?

A

A situation in which all possible gains form trade are being made.

31
Q

Who is an entrepreneur?

A

Someone who takes advantage of profit opportunity in the market.

32
Q

What is a price control law?

A

A law that mandates what price buyers and sellers must trade at.

33
Q

What is an effective price control?

A

A price control law that keeps the price above or below the market-clearing price.

34
Q

What is a price ceiling?

A

A law that prohibits people from trading at a price above a legal maximum.

35
Q

What is a price floor?

A

A law that prohibits people from trading at a price below a legal minimum.

36
Q

What is caused from a maximum price control law?

A

Creates shortage, benefit some consumers, harms producers, does more harm then good.

37
Q

What is caused from a minimum price control law?

A

Creates surplus, benefit some producers and harm others, harms consumers, does more harm then good.

38
Q

What is a rent control law?

A

A maximum price control on rental housing. creates housing shortage

39
Q

What are rationing laws?

A

laws that restrict peoples consumption of certain goods.

40
Q

What is price gouging, and price gouging laws?

A

Price gouging is when prices are to high. Price gouging laws are a maximum price control law.

41
Q

what is the unemployment rate?

A

The percentage of the population that is actively looking for a job but has no work.

Econ 102 (2 decks)

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