Micro Flashcards

0
Q

What is a positive statement?

A

A fact/statement you can prove or disprove

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1
Q

Economics is the science of _______?

A

Scarcity

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2
Q

What is a normative statement?

A

A judgement/opinion. You can’t prove/disprove this

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3
Q

What are the four factors of production?

A

Land
Labour
Capital
Entrepreneur

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4
Q

What can you use a production possibility boundary for? And what does it show?

A

To illustrate the concept of opportunity cost.

It shows the combinations of two or more goods that can be produced using all available resources efficiently.

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5
Q

How could you shift a production possibility boundary?

A
  1. Better trading

2. More skilled workers

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6
Q

What is the shape of the graph on a production possibility boundary and why?

A

Concaved, because of the relative productivity of the factors of production

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7
Q

What is the market mechanism?

A

A system which allocates scarce resources for alternative uses for a buyers maximum satisfaction.

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8
Q

What are the merits of the market system?

A
  • Self control
  • Maximises satisfaction
  • Government failure will not occur
  • Competition
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9
Q

What are the problems of the market system?

A
  • Public Goods
  • Consumers are irrational
  • Asymmetric information
  • Inequality
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10
Q

Headphones and phones are______?

A

Complements goods

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11
Q

Ford and vauxhall are______?

A

Substitute goods

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12
Q

What do Complementary goods determine?

A

The demand for a product

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13
Q

What is the definition of a market?

A

A mechanism to bring buyers and sellers together

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14
Q

Demand and supply determine…?

A

Price

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15
Q

Demand for a product is…?

A

Quantity at Price per Time Period

16
Q

What is the Law of diminishing marginal product utility?

A

The more you can consume of something the less you value it at

17
Q

What is demand determined by?

A

Price and prices of substitutes

18
Q

What factors effect demand?

A
Price
Income levels
Consumers tastes and preferences 
Competition
Fashions
19
Q

What is conspicuous consumption?

A

Buying something for the economic status (price)

20
Q

Equilibrium price is where…?

A

Demand equals supply

21
Q

What is ostentatious consumption?

A

Buying something just because of the brand. To show off.

22
Q

What affects supply?

A
Productivity
Indirect taxes 
Number of firms
Technology
Subsidies 
Weather
Costs of production
23
Q

True or false? Tax reduces supply and subsidies increases supply

24
What does the elasticity of demand show?
It shows the responsiveness in the change in demand
25
Perfectly inelastic means...?
It doesn't matter how much you charge the same number of people will buy it