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Economics > Microeconomics > Flashcards

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
Q

Consumer surplus

Definition

A

The difference between what consumers are willing and able to pay for a good/service, and what they actually pay

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26
Q

Producer surplus

Definition

A

The difference between what producers are willing and able to sell a good/service for, and what they actually sell it for

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27
Q

Consumer surplus

On the Supply-Demand Curve

A

Between demand and price

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28
Q

Producer surplus

On Supply-Demand Curve

A

Between supply and price

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29
Q

Supply

What it represents on Supply-Demand Curve

A

Cost of production/scarce resources

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30
Q

Demand

What it represents on Supply-Demand Curve

A

Benefit of wants and needs

31
Q

Allocative efficiency

A

When social surplus is maximized

32
Q

%change

Equation

A

(new-old) / old

33
Q

Price Elasticity of Demand (PED)

Definition

A

Measures the responsiveness of quantity demanded to change in price

34
Q

YED

Definition

A

Measures the responsiveness of quantity demanded to change in income

35
Q

Revenue

Equation

A

Price X Quantity

36
Q

YED

Equation

A

%change Qd / %change Y

37
Q

PED

Equation

A

%change Qd / %change P

38
Q

PES

Equation

A

%change S / %change P

39
Q

PES

Definition

A

Measures the responsiveness of supply to change in price

40
Q

Inelastic PED

On Price-Deman curve

A

D is steep and negative

41
Q

Elastic PED

On Price-Demand Curve

A

D is shallow and negative

42
Q

Perfectly-inelastic of PED

On Price-Demand Curve

A

D is vertical

43
Q

Determinants of PED

A

Neccesities vs. luxuries, number/similarity of substitutes, length of time, and proportion of income spent

44
Q

PED > 1

Elasticity

A

Elastic

45
Q

PED = 1

Elasticity

A

Unitary elastic

46
Q

PED < 1

Elasticity

A

Inelastic

47
Q

Inelastic PES

In Price-Demand Curve of PES

A

S is steep and positive

48
Q

Elastic PES

In Price-Demand Curve of PES

A

S is shallow and positive

49
Q

Perfectly-inelastic PES

In Price-Demand Curve of PES

A

S is vertical

50
Q

Why do governments tax

A

To have government revenue, discourage consumption of harmful goods, encourage consumption of beneficial goods, and redistribute income

51
Q

YED Determinants

A

Income level, perceptions, change in product, cycle, and marketing

52
Q

0 < YED < 1

Sectors

A

Primary (land)

53
Q

YED > 1

Sector

A

Manufactoring

54
Q

YED&raquo_space; 1

Sector

A

Service

55
Q

Normal goods

What are they made up of

A

Luxury goods and necessities

56
Q

YED > 0

Type of goods

A

Normal

57
Q

YED > 1

Type of goods

A

Luxury

58
Q

0 < YED < 1

Type of goods

A

Neccesities

59
Q

YED < 0

Type of goods

A

Inferior

60
Q

Cons of Rent Control

A

Gives landlords little incentive to maintain/improve, discourages construction for anyone but the rich, shortage, long waiting lists, and underground markets

61
Q

Pros of Rent Control

A

Housing is more affordable for low-income individuals

62
Q

YED is always…

A

Either positive or negative

63
Q

PED is always…

A

Negative

64
Q

PES is always…

A

Positive

65
Q

Effects of food control

A

Shortages, non-price rationing (queues), underground markets, falling farmer incomes, misallocation of resources

66
Q

Market failure

A

Leads to allocative inefficiency

67
Q

Externality

A

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
Q

ùmarginal private cost

A

Refer to costs to producers of producing one more unit of a good

69
Q

Marginal social cost

A

Refer to costs to society of producing one more unit of a good

70
Q

Marginal private benefits

A

Refer to benefits to consumers from consuming one more unit of a good

71
Q

Marginal social benefits

A

Refer to benefits to society from consuming one more unit of a good

72
Q

Negative Production Externality Corrections

A

Market-based policies - Taxes

Government regulation - force companies to carbon capture

73
Q

Positive Production Externality Corrections

A

Direct government provision - free research

Subsidies

74
Q

Positive Consumption Externality Corrections

A

Legislation/Regulation - Education is compulsory

Economics (4 decks)

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