Revish Flashcards
Conditions affecting demand
Non price factors
- Advertising
- trends / Fashion
- Regulation
- Change in income
- Seasonal
- Demographic
- Price of other goods
Whats the formula for XED
% change in QD b / % change in a
Draw the graph( with labels ) for a substitute good
How do you know a good is a substitute
Positive correlation
Will have a positive XED
Draw a graph ( with labels ) for a compliment good
How do you know a good is a compliment
Negative correlation.
Will have a negative XED
What is a good if it has a + YED
It is a normal good, an increase in income leads to an increase in quantity demanded
What is a good if it had a - YED
It is an inferior good, an increase in income leads to a decrease in quantity demanded
What is classified as a normal good
Any result above 0.
Positive >1 : Luxury good
Positive 0< x <1 : Necessity
What are the conditions of supply
- Improved technology
- Availability of resources
- Spare capacity
- Reduction in cost of production
- Weather
- Tax levels
When is a good elastic and inelastic
Elastic >1
Inelastic <1
Whats a economic good
Goods that demand a price, and are scarce
Whats a free good
Resources that don’t demand a price
Whats a positive economic statement
Something that is fact, objective and can be proved]
Whats an normative economic statement
Something that is a valued judgement, subjective and opinion
How do you shift the PPF out
Increase quality:
- > Population increase
- > Immigration
- > Reduce school leavers age
- > increase retirement age
Increase quantity:
- > Training
- > Education
- > Technology
Why is opportunity cost the highest at the extremes of there graph
Some factors of production aren’t able to switch, e.g. switch from farming to raising sheep
What are the 4 functions of money
Medium for exchange
Store of value
Measure of value
Method of deferred payment
