Section 1 Flashcards
What are the demand shifters
- Tastes
- Number of buyers
- Income (inferior normal)
- Expectations
What are the supply shifters
- Number of sellers
- Expectations
- Technology
- Input prices (wages and materials)
Describe the elasticity of demand using pictures
Add
Explain elasticity of supply using a picture
Add
What does it mean to be flatter
It’s more elastic, purchased less when the price increases
What is meant by steeper
More inelastic
Income elasticity what is the normal good
If it’s greater than one it is a luxury or superior good
If it is zero, income is not associated with the demand
If it is less than one, it is a necessity
With regards to income elasticity is normal good positively or negatively related
Positively related
With regards to income elasticity is an inferior good positively or negatively related
Negatively related
What happens when your income rises with an inferior good
The demand will decrease
Describe the price elasticity of demand using a picture
Add
What is the formula for cross price elasticity
Change in demand a good one / changing prices good to
What is the formula to calculate slope
Changing rise of two prices / change and run of two numbers
Jane makes $200 per hour, types 4000 words per hour and her assistant types 1000 words per hour how much does she pay her assistant in order to do her typing for her
4000/ 1000 = 4 times faster than the assistant
$200/4 = $50
Pay her less than $50
Microeconomics
the study of how households and firms make decisions and how they interact in markets
