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Microeconomics Flashcards

1
Q

Capitalism

A

Economic system where private actors own and control property in accordance with their interests, and demand and supply freely set prices in markets in a way that can serve the best interests in society

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2
Q

Non-price determinants

Definition

A

Any change except in price

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3
Q

Inferior good

A

Something you buy less of as your income increases

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4
Q

Indirect taxes

A

Taxes not payed directly to the government, but through firms (sales tax, etc..)

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5
Q

Utility

A

The value you get from things

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6
Q

Diminishing Marginal Utility

A

The more you consume/have something, the less benefit you get from it

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7
Q

Demand

Definition

A

What people want or need

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8
Q

Market bubbles

A

When price is thought to hike on a product, so people buy it in mass

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9
Q

Law of Demand

A

There is an inverse relationship between price and quantity demanded, ceteris paribas

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10
Q

Law of Supply

A

There is a positive relationship between price and quantity supplied, ceteris paribas

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11
Q

Change in price

A

Movement along the line

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12
Q

Change in non-price determinant

Effect on Supply-Demand Curve

A

Shift in supply or demand

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13
Q

Non-price Determinants of Demand

examples

A

Tastes & preferences, size of market, change in income

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14
Q

Non-price determinants of supply

Examples

A

Cost of production, number of firms, taxes, subsidies

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15
Q

4 factors of production

A

Land, labor, capital, entrepreneurship

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16
Q

Surplus

In Supply-Demand Curve

A

Quantity supplied > quantity demanded

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17
Q

Shortage

In Supply-Demand Curve

A

Quantity demanded > quantity supplied

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18
Q

Equilibrium

In Supply-Demand Curve

A

Demand = Supply

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19
Q

Left triangle

On Supply-Demand Curve

A

Profit

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20
Q

Right triangle

On Supply-Demand Curve

A

Waste

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21
Q

Top triangle

On Supply-Demand Curve

A

High-value products/services

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22
Q

Bottom triangle

On Supply-Demand Curve

A

Low-value goods/services

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23
Q

Social surplus

A

Producer surplus + consumer surplus

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24
Q

Social surplus only maximized if…

A

Demand = Supply

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25
Consumer surplus | Definition
The difference between what consumers are willing and able to pay for a good/service, and what they actually pay
26
Producer surplus | Definition
The difference between what producers are willing and able to sell a good/service for, and what they actually sell it for
27
Consumer surplus | On the Supply-Demand Curve
Between demand and price
28
Producer surplus | On Supply-Demand Curve
Between supply and price
29
Supply | What it represents on Supply-Demand Curve
Cost of production/scarce resources
30
Demand | What it represents on Supply-Demand Curve
Benefit of wants and needs
31
Allocative efficiency
When social surplus is maximized
32
%change | Equation
(new-old) / old
33
Price Elasticity of Demand (PED) | Definition
Measures the responsiveness of quantity demanded to change in price
34
YED | Definition
Measures the responsiveness of quantity demanded to change in income
35
Revenue | Equation
Price X Quantity
36
YED | Equation
%change Qd / %change Y
37
PED | Equation
%change Qd / %change P
38
PES | Equation
%change S / %change P
39
PES | Definition
Measures the responsiveness of supply to change in price
40
Inelastic PED | On Price-Deman curve
D is steep and negative
41
Elastic PED | On Price-Demand Curve
D is shallow and negative
42
Perfectly-inelastic of PED | On Price-Demand Curve
D is vertical
43
Determinants of PED
Neccesities vs. luxuries, number/similarity of substitutes, length of time, and proportion of income spent
44
PED > 1 | Elasticity
Elastic
45
PED = 1 | Elasticity
Unitary elastic
46
PED < 1 | Elasticity
Inelastic
47
Inelastic PES | In Price-Demand Curve of PES
S is steep and positive
48
Elastic PES | In Price-Demand Curve of PES
S is shallow and positive
49
Perfectly-inelastic PES | In Price-Demand Curve of PES
S is vertical
50
Why do governments tax
To have government revenue, discourage consumption of harmful goods, encourage consumption of beneficial goods, and redistribute income
51
YED Determinants
Income level, perceptions, change in product, cycle, and marketing
52
0 < YED < 1 | Sectors
Primary (land)
53
YED > 1 | Sector
Manufactoring
54
YED >> 1 | Sector
Service
55
Normal goods | What are they made up of
Luxury goods and necessities
56
YED > 0 | Type of goods
Normal
57
YED > 1 | Type of goods
Luxury
58
0 < YED < 1 | Type of goods
Neccesities
59
YED < 0 | Type of goods
Inferior
60
Cons of Rent Control
Gives landlords little incentive to maintain/improve, discourages construction for anyone but the rich, shortage, long waiting lists, and underground markets
61
Pros of Rent Control
Housing is more affordable for low-income individuals
62
YED is always...
Either positive or negative
63
PED is always...
Negative
64
PES is always...
Positive
65
Effects of food control
Shortages, non-price rationing (queues), underground markets, falling farmer incomes, misallocation of resources
66
Market failure
Leads to allocative inefficiency
67
Externality
Occurs when the actions of consumers or producers give rise to negative or positive side-effects on other people who are not part of these actions, and whose interests are not taken into consideration
68
ùmarginal private cost
Refer to costs to producers of producing one more unit of a good
69
Marginal social cost
Refer to costs to society of producing one more unit of a good
70
Marginal private benefits
Refer to benefits to consumers from consuming one more unit of a good
71
Marginal social benefits
Refer to benefits to society from consuming one more unit of a good
72
Negative Production Externality Corrections
Market-based policies - Taxes Government regulation - force companies to carbon capture
73
Positive Production Externality Corrections
Direct government provision - free research Subsidies
74
Positive Consumption Externality Corrections
Legislation/Regulation - Education is compulsory

Economics (4 decks)

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