man econ prelim 1

Question 1

present value

Answer 1

how much we have to invest today at a given interest rate in order to recieve a given future value

Question 1

demand

Answer 1

various quantities of a specific good consumers are willing and able to purchase at various prices

Question 2

normal good

Answer 2

a good for which demand increases on an increase in income

Question 3

inferior

Answer 3

a good for which demand decreases on an increase in income

Question 4

substitutes

Answer 4

goods used an alternatives to one another

Question 5

complements

Answer 5

goods used together as a package

Question 6

inverse demand

Answer 6

solving the demand equation for price

Question 7

consumer surplus

Answer 7

difference between what a consumer would be willing to pay and the actual amount paid

Question 8

supply

Answer 8

various quantities of a specific good producers are willing and able to sell at various prices

Question 9

inverse supply

Answer 9

solving the supply equation for price

Question 10

inverse supply

Answer 10

solving the supply equation for price

Question 11

producer surplus

Answer 11

difference between the MC of producing a good and what it is sold for

Question 12

price ceiling

Answer 12

govt. mandated max price; to be effective it must be set below market clearing price

Question 13

price floor

Answer 13

govt. mandated min price; to be effective it must be set above market clearing price

Question 14

excise tax

Answer 14

govt adds a specific dollar amount to the price of a good

Question 15

ad valorem

Answer 15

tax that is a percentage of the price

Question 16

consumer burden

Answer 16

share of govt revenue from a tax due to the increase in Pc

Question 17

producer burden

Answer 17

share of govt revenue from a tax due to the decrease in Pp

Question 18

subsidy

Answer 18

govt policy that decreases Pc and increases Pp to promote behavior

Question 19

consumer benefit

Answer 19

share of govt expenditure on a subsidy due to the decrease in Pc

Question 20

producer benefit

Answer 20

share of govt expenditure on a subsidy due to the inrcease in Pp

Question 21

own price elasticity of demand

Answer 21

measures the percent change in q demanded from a given % change in the price of a good

Question 22

perfectly inelastic

Answer 22

n=0

Question 23

perfectly elastic

Answer 23

n= infinity

Question 24

elastic

Answer 24

n>1

Question 25

inelastic demand

Answer 25

n<1

Question 26

total revenue

Answer 26

pq

Question 27

marginal revenue

Answer 27

change in TR from selling 1 more unit

Question 28

__ elasticity of demand

Answer 28

% change in q from a given % change in ____

Question 29

optimal price

Answer 29

P=MC * (1/(1+1/n))