Microecons

Question 1

Scarcity

Answer 1

Central econ problem, unlimited wants cannot be fulfilled by limited resources

Question 2

PPC

Answer 2

shows all possible combinations of the maximum quantity of 2 goods a country can produce within a specified period of time with all its resources fully and efficiently employed at a given state of tech

Question 3

Decision making process

Answer 3

1. Final decision by econ agent
2. Objective of EA
3. Constraints faced (trade offs)
4. Benefits and costs of this decision
5. Weigh benefits and cost (B>C or C>B)
6. Review decision (intended/unintended consequences/ int/ext changes)

Question 4

DD

Answer 4

qty of the good that consumers are willing and able to consume at every given price over a given period of time ceteris paribus

Question 5

Law of DD

Answer 5

at a given time the qty DD is inversely prop to its price ceteris paribus

Question 6

EGYPT

Answer 6

Expectations
Gove policies
Income
Population
Price of related goods
Tastes and preferences

Question 7

WETPIGS

Answer 7

**Weather **
Expectations of producers
Tech
Price of related goods
input prices
Gove policies
Sellers no of

Question 8

Mkt eqm

Answer 8

intersection of DD SS curve, qty supplied exactly equal to qty dd at eqm price

Question 9

Inferior goods

Answer 9

DD is negatively related to consumers Y

Question 10

Normal good

Answer 10

DD is positively related to consumers Y

Question 11

Substitures

Answer 11

alternative that can satisfy similar consumer wants

Question 12

Complements

Answer 12

goods that enhance consumers satisfaction when consumed tgt

Question 13

Price Elasticity of Demand (PED)

Answer 13

degree of responsiveness of the quantity demanded of a good
due to a change in its price, ceteris paribus.
PED = (% change in qty demanded of good A) / (% change in price of good A)

Question 14

Income Elasticity of Demand (YED)

Answer 14

degree of responsiveness of demand of a good due to
changes in consumers’ income, ceteris paribus.
YED = (% change in demand of a good) / (% change in income)

Question 15

Cross Elasticity of Demand (XED)

Answer 15

degree of responsiveness of demand of a good due to
changes in the price of related good, ceteris paribus.
XED = (% change in demand of good A) / (% change in price of good B)

Question 16

Price Elasticity of Supply (PES)

Answer 16

degree of responsiveness of the quantity supplied of a good due
to a change in its price, ceteris paribus. PES = (% change in qty supplied of good A) / (% change in price of good A)

Question 17

TR

Answer 17

P x Q

Question 18

Consumer Surplus

Answer 18

the difference between the maximum amount price buyers are willing and able to pay for a good
and the actual price paid.
Measurement of consumer welfare

Question 19

Producer Surplus

Answer 19

difference between the price sellers are willing and able to sell a good and the
actual price they receive.
Measurement of producers welfare

Question 20

Price ceiling

Answer 20

Legally est max price
Set below eqm mkt price

Question 21

Price floor

Answer 21

Legally est minimum price
Set above eqm mkt price

Question 22

PC

Answer 22

many buyers/sellers
homo prod
perfect knowladge
no bte

LR normal profits

Question 23

MPC

Answer 23

diff products
imperfect info
low bte
no dom firm

SR all 3
LR normal prof

Question 24

Oligopoly

Answer 24

homo/diff products
a few dom firms
high bte
imperf info

SR all 3
LR Supernormal

Question 25

Monopoly

Answer 25

Single producer high bte imperf info no substitutes Supernorm/norm profits

Question 26

Profit max

Answer 26

mc=mr output

Question 27

Allocative eff

Answer 27

P=mc scarce resources allocated to produce a combi of g+s most wanted by society cannot make someone better off without making someone worse off

Question 28

Dynamic eff

Answer 28

R&D

Question 29

Productive eff

Answer 29

FIRM: any point on LRAS SOCIETY: LOWEST point on LRAS

Question 30

Law of diminishing marginal returns

Answer 30

more qty of a variable factor used in combination with a given qty of fixed factor, theres a pt where an additional unit of the variable factor produces less output

Question 31

IEOS

Answer 31

unit cost reductions as a result of expanding the firms scale of prod

Question 32

IDOS

Answer 32

unit cost increments as a result of the firm overexpanding its scale of prod

Question 33

EEOS

Answer 33

unit cost red as a result of the industry expanding

Question 34

EDOS

Answer 34

unit cost increments as a result of the industry overexpanding