RANDOM ECON KNOWLEDGE Flashcards

1
Q

3 Relationships between products

A

substitute goods / complementary goods / unrelated goods

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2
Q

Speculation Significance

A

when there is speculation of a product’s price changing in the future, it will often lead to a change in that product’s immediate demand

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3
Q

Non-Price Determinants of Demand

A
  • income
  • price of substitute / complementary goods
  • consumer preference
  • age / government policy / season
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4
Q

Price Elasticity of Demand (PED)

A

percentage change in quantity demanded / percentage change in price

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5
Q

Income Elasticity of Demand (YED)

A

percentage change in quantity demanded / percentage change in income of the consumer

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6
Q

Supply

A

the quantity of a good or service that producers are willing and able to supply at different prices in a given period of time

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7
Q

Demand

A

the quantity of a good or service that consumers are willing and able to purchase at different prices in a given period of time

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8
Q

Short-Run

A

the period of time it takes to fix one factor of production

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9
Q

Long-Run

A

the period of time it takes in which all factors of production are variable

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10
Q

Price Elasticity of Supply (PES)

A

percentage change in quantity supplied / percentage change in price of the product

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11
Q

3 Significances of Price

A
  • signal : prices give information to the market
  • ration : prices create scarcity
  • incentivize : prices dictate whether or not consumers will purchase
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12
Q

Merit Good

A

a commodity or service that is regarded by society to be deserving of government finance

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13
Q

Demerit Good

A

a good or service that when consumed is considered to be unhealthy

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14
Q

Indirect Tax

A

a tax imposed upon the expenditure of a certain good or service

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15
Q

Subsidy

A

a sum of money granted to producers by the government to keep the price of commodities and services low

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16
Q

Reasons to implement an indirect tax

A
  • to discourage the consumption of a demerit good
  • to provide a source of revenue for the government
  • combat inflation
  • to redistribute income (luxury goods tax)
17
Q

Reasons to implement a subsidy

A
  • to keep the price of an essential good low
  • to guarantee a supply for a good deemed necessary by the government
  • to allow producers to compete with cheaper overseas competitors
18
Q

Price Ceilings

A

when a government sets the maximum price of a good or service below the market equilibrium price

19
Q

Price Floor

A

when a government sets the minimum price of a good or service above the equilibrium price

20
Q

Market Failure

A

when there is an inefficient distribution of goods and services in the free market

21
Q

Factors of Production

A
  • land
  • labor
  • entrepreneurship
  • capital
22
Q
A