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fall semester 2024 > microeconomics exam two > Flashcards

microeconomics exam two Flashcards

1
Q

what is comparative statics?

A

studying how demand and supply curves shift

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2
Q

what directions do increases and decreases go?

A

increase : right
decrease : left

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3
Q

what is elasticity?

A

a measure of responsiveness of one variable to changes in another
OR
if x changes, what happens to y?

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4
Q

what is a normal good?

A

a good for which demand increases when income increases, and demand decreases when income decreases

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5
Q

what is an inferior good?

A

a good for which demand decreases when income increases, and demand increases when income decreases

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6
Q

what is a substitute?

A

goods that perform a similar function or satisfy a similar human desire

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7
Q

what is a complement?

A

goods that are more valuable when consumed together

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8
Q

what is being ineleastic?

A

when the absolute value of a goods price elasticity of demand is less than one.

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9
Q

what is being elastic?

A

when the absolute value of a goods price elasticity of demand is greater than one.

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10
Q

how does elasticity affect the graphs?

A
  • if E is greater than 1, ELASTIC
  • if E is equal to infinity, PERFECTLY ELASTIC
  • if E is less than 1, INELASTIC
  • if E is less than 0, PERFECTLY INELASTIC
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11
Q

what is the equation for percent change?

A

new - old
old

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12
Q

what is the equation for cross price elasticity of demand?

A

percent change of quantity
percent change of price

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13
Q

what is the equation for income elasticity of demand?

A

percent change of quantity
percent change of income

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14
Q

what is consumer surplus?

A

a measure of the gain that the buyer experiences from the exchange

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15
Q

what is producer surplus?

A

a measure of the gain that the seller experiences from the exchange

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16
Q

what is total gain from trade?

A

consumer surplus + producer surplus

17
Q

what is equilibrium?

A

a situation in which no individual wants to change the behavior

18
Q

what is equilibrium price and demand?

A

market clearing!

19
Q

what is a shortage?

A

when the quantity supplied is lower than the quantity demanded

20
Q

what is a surplus

A

when the quantity demanded is lower than the quantity supplied

21
Q

what is dead weight loss?

A

gains from trade that are not being made (lost trade)

22
Q

what is economic efficiency?

A

a situation in which all possible gains are being made

23
Q

what is an entrepreneur?

A

a person who takes advantage of a profit opportunity in the market

24
Q

what is a price control law?

A

a law that mandates what prices buyers and sellers must trade at

25
Q

what is a price ceiling?

A

a law that prohibits people from trading at a price above the legal maximum

26
Q

what is a price floor?

A

a law that prohibits people from trading at a price below the legal minimum

26
Q
A
27
Q
A
28
Q
A
29
Q
A
30
Q
A
31
Q
A

fall semester 2024 (5 decks)

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