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microeconomics fall 2018 southern union > Test 1 Chapters 1,2,3,6 > Flashcards

Test 1 Chapters 1,2,3,6 Flashcards

1
Q

Economics

A

the study of man’s unlimited wants in a world of limited sources

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2
Q

When is a good considered scarce?

A

if everybody can’t get all they want for free

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3
Q

Guideposts to Economic Thinking

A
  1. There’s no such thing as a free lunch.
  2. People choose purposefully- therefore they econmize.
  3. Information, like everything else, is a scarced good.
  4. People respond to incentives
  5. Remember the secondary effects
  6. Value is subjective.
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4
Q

absolute advantage

A

you can produce the product faster than the other guy

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5
Q

comparative advantage

A

you can produce the product cheaper than the other guy

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6
Q

You have the lowest opportunity cost because

A

you have the comparative advantage

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7
Q

opportunity cost

A

what you have to give up in order to do something else

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8
Q

the value of your second best alternative

A

absolute advantage

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9
Q

economics is based on

A

supple and demand

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10
Q

first law of demand

A

there is negative or inverse relationship between the price and the quantity demanded

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11
Q

first law of demand- Price goes up, Quantity Demanded

A

goes down

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12
Q

first law of demand - Prices goes down, Quantity Demanded

A

goes up

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13
Q

there is not a good that can violate the

A

first law of demand

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14
Q

the demand curve plots out

A

every possible price and quantity demanded combination and shows the maximum you are willing to pay to buy at any give quantity

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15
Q

change in the quantity demanded

A

is due only to a change in the price of the product

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16
Q

change in demand

A

at any give price you want to buy more or less than before

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17
Q

increase in demand

A

at any give price you want to buy more than before

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18
Q

decrease in demand

A

at any give price you want to buy less than you did before

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19
Q

demand determinants

A
  1. taste and preferences
  2. cost of related goods
  3. income
  4. number of buyers
  5. future price
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20
Q

susbtitutes

A

goods that can be used in place of one another

coke - pepsi

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21
Q

complimentary goods

A

goods that are used together

milk-cereal

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22
Q

substitues - if the price of coke goes up what happens to Pepsi

A

its price goes up

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23
Q

substitutes if the price for coke goes down what happens to pepsi

A

the price goes down

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24
Q

compliments - if the price price of milk goes up what happens to cereal

A

the demand for cereal goes down

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25
Q

compliments - if the price for Big Mac goes down what happens to French fries

A

the demand goes up for French fries

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26
Q

income - the less you make the quality of your goods _

A

go down

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27
Q

income - the more you make the the quality of your goods _

A

increase (better quality)

28
Q

future price - if you expect the price to rise in the near future you will _

A

increase your current demand (buy more)

29
Q

future price - if you expect the price to fall in the near future you will _

A

decrease your current demand (buy less until the price lowers) (upcoming sale at hobby lobby, you wait for the sale, so your current demand decrease for hobby lobby)

30
Q

price of the product will never change the

A

demand

31
Q

first law of supply

A

there is a positive or direct relationship between the price and quantity supply

32
Q

first law of supply - price goes up, quantity supply goes

A

up

33
Q

first law of supply - price goes down, quantity supply goes

A

down

34
Q

supply curve

A

plots out every possible price and quantity supplies combination and shows the minimum price you are willing to accept to supply any given quantity

35
Q

surplus

A

will exist whenever at a give price, the quantity supplied is greater than the quantity demanded

36
Q

what causes a surplus

A

the price is too high (it is above the market equilibrium price

37
Q

what cause a shortage

A

will exist whenever at a given price the quantity demanded is greater than the quantity supplied (the price is too low) (it is below the equilibrium price)

38
Q

demand goes up, price* goes up, quantity* goes

A

up

39
Q

demand goes down, price* goes down, quantity* goes

A

down

40
Q

supply goes up, price* goes down, quantity* goes

A

up

41
Q

supply goes up, price * goes up, quantity* goes

A

down

42
Q

demand goes up

A

at any given price you buy more

43
Q

demand goes down

A

at any given price you want to buy less

44
Q

supply goes up

A

at any give price you want to sell more

45
Q

supply goes down

A

at any give price you want to sell less

46
Q

price ceiling

A

the maximum you can legally charge for the product

47
Q

for ceiling price to be effective

A

it has to be set below the market equilibrium price

- it will always cause a shortage

48
Q

price floor

A

the minimum price you can legally charge for the product

49
Q

for price floor to be effective

A

it has to be set above the market equilibrium price

- it will cause a shortage

50
Q

second law of supply and demand

A

over time the supply and/or demand for a product becomes elastic

51
Q

elasticity

A

how responsive you are to a change in the price of the product

52
Q

elastic

A

you are very responsive to a change in the price of the product

53
Q

a small change in the price results in

A

large change in the quantity demanded

54
Q

inelastic

A

you are very unresponsive to a change in the price of the product

55
Q

a large change in the price results in

A

a small change in the quantity demanded

56
Q

what does a relatively elastic graph look like

A

slight slope in demand

57
Q

elasticity determinants

A
  1. number of substitutes
  2. percentage of income
  3. necessity vs. luxury
58
Q

consumer surplus

A

the difference between the maximum you were willing today for the product and the price you actually paid for it

59
Q

producer surplus

A

the difference between the minimum price you were willing to sell the product for the price you actually sold it for

60
Q

change in the quantity supplied is a change in the

A

supply

61
Q

change in the quantity supplied is due only to a change in the

A

price of the product

62
Q

at any given price you want to supply more or less than before

A

Change in supply

63
Q

supply determinants

A 
taxes and subsidies
number of sellers
costs of input
technology 
nature
64
Q

at any given price you want to supply more than before (curve shifts right)

A

increase in supply

65
Q

at any given price you want to supply less than before (curve shifts left)

A

decrease in supply

microeconomics fall 2018 southern union (3 decks)

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