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Econ mid-term 1 > micro 208 - mid-term > Flashcards

micro 208 - mid-term Flashcards

1
Q

Economics

A

= the study of the use of scarce resources to satisfy “unlimited” human wants (goods and services)

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2
Q

Resources / factors of production

A

land, labour, capital

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3
Q

Opportunity cost

A

= the value of the next best alternative that is forgone when one alternative is chosen

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4
Q

Diff types of economies

A

market, planned, traditional, command, free-market, mixed

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5
Q

planned economy

A

Economic activities are conducted according to plans by the gov

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6
Q

Market economy

A
  • Private ownership of resources is predominant
  • Economic decisions are made in a decentralized manner
  • Prices and quantities are determined by supply and demand on the markets.
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7
Q

Marginal decisions

A

producer weighs marginal cost of a worker (extra labor that must be paid) against marginal benefit of worker (increase in sale revenues)

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8
Q

positive statements

A
  • are statements about matters of fact.
  • A positive statement is about what actually is, was, or will be.
    Ex: if this, then that
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9
Q

normative statements

A

depend on value judgements and cannot be evaluated solely by a recourse to facts.

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10
Q

cross-sectional data

A

observations of many different individuals (subjects, objects) at a given time, each observation belonging to a different individual

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11
Q

Time-series data

A

evolves over time

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12
Q

Panel data

A

longitudinal data where observations are for the same subjects each time

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13
Q

variables are positively related

A

When two variables move in the same direction

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14
Q

variables are negatively related

A

When two variables move in opposite directions

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15
Q

variables are linearly related to each other

A

If the graphs of these relationships are straight lines

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16
Q

Quantity Demanded vs demand

A

Demand is the relationship between desired purchases and all the possible prices of the product
= not just the particular quantity demanded at a moment
Quantity demanded refers to a flow of purchases expressed in a period of time → ex: 20 units per day

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17
Q

quantity demanded

A

the total amount of any particular good or service that consumers want to purchase during some time period

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18
Q

stock

A

a quantity that is measured at a specific point in time or over a specific period

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19
Q

Flow

A

a quantity that is measured over a period of time

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20
Q

Increase in demand

A

curve shifts right

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21
Q

Decrease in demand

A

curve shifts left

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22
Q

Normal goods

A

goods for which the quantity demanded increases when average income rises

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23
Q

Inferior goods

A

goods for which quantity demanded falls when income rises → ex: fewer rides on public transit as income rises

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24
Q

Substitues in consumption

A

goods that can be used in place of another good to satisfy similar needs or desire

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25
Q

Complements in consumption

A

goods that tend to be consumed together

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26
Q

Movements along the demand curve

A

changes in the quantity demanded of a good or service in response to changes in its price while keeping all other factors constant

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27
Q

Shifts of the demand curve

A

changes in the overall demand for a good or service due to factors other than the price

28
Q

Change in Demand vs. Change in Quantity Demanded

A

Change in demand = shift of the entire demand curve, which can be caused by various factors such as changes in consumer preferences, incomes, or population

Change in quantity demanded = movement from one point to another along the demand curve, typically caused by changes in price

29
Q

Quantity supplied

A

amount of a good or service that producers are willing to sell in a specific time period

30
Q

a market

A

any situation where buyers and sellers negotiate the exchange of goods or services, whether in physical places, online platforms, or other mediums

31
Q

Market equilibrium

A

Occurs when the quantity demanded equals the quantity supplied, resulting in no shortage or surplus

32
Q

Equilibrium price

A

price at which this equality is achieved

33
Q

absolute price

A

amount of money that must be spent to acquire one unit of a commodity

34
Q

relative price

A

its cost in terms of another good or service, rather than in terms of money
how much of one good must be given up to obtain one unit of another good.
Example: If a book costs $20 and a pen costs $5, the relative price of the book in terms of pens is 4 pens (because $20 ÷ $5 = 4). Conversely, the relative price of a pen in terms of books is 0.25 books.

35
Q

elastic demand

A

quantity demanded is highly responsive to changes in price. This means that consumers are sensitive to price changes, and even a small change in price can lead to a significant change in the quantity demanded.

36
Q

inelastic demand

A

quantity demanded is relatively unresponsive to changes in price

37
Q

calculation of price elasticity of demand

A

= percentage change in quantity demanded / percentage change in price

38
Q

short-run demand curve

A

immediate response of quantity demanded to a price change

39
Q

long-run demand curve

A

response of quantity demanded after sufficient time has passed for consumers to develop or switch to substitute products

40
Q

total expenditure

A

the amount consumers spend on a product

41
Q

total expenditure calculation

A

price * quantity

42
Q

price elasticity of supply

A

measures the responsiveness of the quantity supplied to a change in the product’s price

43
Q

calculation of price elasticity of supply

A

= percentage change in quantity supplied / percentage change in price

44
Q

supply curves typically have positive slopes

A

as the price increases, the quantity supplied also increases.

45
Q

calculation of supply elasticity

A

consider the change in quantity supplied and price between two points on a supply curve. Divide the percentage change in quantity supplied by the percentage change in price

46
Q

elasticity classification

A

–> When hS > 1, supply is said to be elastic, meaning that the quantity supplied is highly responsive to changes in price.
–> When hS < 1, supply is said to be inelastic, indicating that the quantity supplied is not very responsive to price changes.

47
Q

zero elasticity

A

If the supply curve is vertical, meaning that the quantity supplied remains constant as price changes, the elasticity of supply is zero.

48
Q

Infinite Elasticity

A

A horizontal supply curve has an infinite elasticity of supply. A slight decrease in price leads to a reduction in the quantity supplied from an indefinitely large amount to zero.

49
Q

ease of substitution

A

depends on how easily producers can shift their resources and production processes in response to changes in prices

50
Q

excise tax

A

tax imposed on specific goods or services

51
Q

income elasticity of demand

A

measures the responsiveness of demand to changes in income

52
Q

calculation of income elasticity of demand

A

= percentage change in quantity demanded / percentage change in income

53
Q

cross elasticity of demand

A

measures how the quantity demanded of one product responds to changes in the price of another product

54
Q

calculation of cross elasticity of demand

A

= percentage change in quantity demanded of good X / percentage change in price of good Y

55
Q

price floor

A

the minimum permissible price that can be charged for a particular good or service

56
Q

Price ceilings

A

maximum price at which certain goods and services may be legally exchanged

57
Q

black market

A

any market in which transactions take place at prices that violate a legal price control

58
Q

economic surplus

A

the dif between the value to consumers and the additional costs to firms

59
Q

output quotas

A

limit set by governing body or regulatory authority on the quantity of a particular product that can be produced or supplied in a specific period

60
Q

total utility

A

consumer’s total satisfaction resulting from the consumption of a given product

61
Q

marginal utility

A

additional satisfaction obtained from consuming one additional unit of a product

62
Q

central hypothesis of utility theory

A

the utility that any consumer derives from successive units of a particular product consumed over some period of time diminishes as total consumption of the product increases (holding constant the consumption of all other products).

63
Q

real income

A

income expressed in terms of the purchasing power of money income

64
Q

substitution effect

A

when purchasing power is held constant, the change in the quantity demanded of a product whose relative price has changed is called the substitution effect of the price change

65
Q

income effect

A

the change in the quantity of a product demanded resulting from a change in real income (holding relative prices constant)

66
Q

Giffen goods

A

an inferior good for which the income effect outweighs the substitution effect so that the demand curve is positively sloped

67
Q

consumer surplus

A

the difference between the total value that consumers place on all the units consumed of some product and the payment they actually make to purchase the amount of the product

Econ mid-term 1 (4 decks)

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