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
