Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
69 Cards in this Set
- Front
- Back
A vertical demand curve is |
perfectly inelastic |
|
A horizontal demand curve is |
perfectly elastic |
|
If you increase the price of an inelastic good, total revenue... |
goes up |
|
if you increase the price of an elastic good, total revenue... |
goes down |
|
If you increase or decrease the price of a unit elastic good, total revenue... |
does not change |
|
The tax burden is carried by the more ____________ curve |
inelastic |
|
The extra happiness you gain from one additional unit |
marginal utility |
|
In the reference year, the value of the CPI = |
100 |
|
If a good's price goes up, it's marginal utility goes _________ |
down |
|
If demand decreases, the demand curve shifts to the __________ |
left |
|
If costs rise, supply shifts to the __________ |
left |
|
If costs fall, supply shifts to the _________ |
right |
|
if demand is linear, the _______ half of the curve is elastic |
top |
|
Positive statements are |
Assertive, based on fact |
|
Normative statements are |
opinion based & can't be proven |
|
cross-section data is |
values for different variables at ONE point in time |
|
tax wedge |
difference between consumer & producer prices |
|
revenue burden |
$ raised by a tax |
|
deadweight loss/excess burden |
losses incurred by producers & consumers due to a tax |
|
externality |
cost/benefit affecting those not in the transaction |
|
price elasticity of demand formula: |
% change q ------------------ % change p |
|
Inferior goods have _________ income elasticity |
negative |
|
the tax burden falls on the __________ curve |
steeper |
|
the way in which a change in price alters a consumer's decisions by altering the consumer's purchasing power |
income effect |
|
Economics studies trade-offs between e________ and e___________ |
efficiency, equity |
|
When you have equity, you also have ____________ |
inefficiency |
|
When you have efficiency, you also have ____________ |
inequity |
|
Forced equity is a _______ idea because..... |
BAD! (e.g. communism). People get lazy. |
|
People work harder when there (is/is no) equity |
is no |
|
based on what you know at the time, you will always choose what you think is best for you |
Rationality |
|
a punishment or reward that motivates you |
incentive |
|
giving up scarce resources in order to get something equally or more valuable |
Trade |
|
In a trade, who ends up better off? |
Both parties |
|
Govt prevents misallocation of resources through ___________ rights |
property |
|
Purely govt economy |
Command economy |
|
Market + Govt involvement economy |
Mixed economy |
|
Models are built on ________________ |
Assumptions |
|
Slope of the PPF tells you the ___________________ |
opportunity cost |
|
When do two people have the same opportunity costs? |
When the PPF slopes are identical |
|
Input used to produce output |
Resource |
|
Is money a resource? |
No! |
|
Factors which affect price (3) |
Technology, competition, price of inputs |
|
Physical restrictions on output of a good |
Quotas |
|
Ad Valorem tax |
same $$ regardless of item price (e.g. 20$ tax on any flight) |
|
Changes to the way we spend our money due to“artificial” factors like taxes |
distortion |
|
Issues that affect everyone, eg pollution |
Common properties |
|
Utility analysis |
Assumes people can rate how much they enjoy things numerically |
|
Indifference analysis |
Assumes people can only compare things (I like broccoli more than lettuce) |
|
4 features of indefference curves |
They don't touch, they don't bow out, negative slope, higher = better |
|
calculating CPI: |
current price/base yr price * 100 |
|
Elasticity formula: |
((Q2-Q1)/(Q2+Q1)) / ((P2-P1)/(P2+P1)) |
|
ceteris paribus |
all other things remaining equal |
|
quantity supplied |
single point on the supply curve |
|
consumer surplus |
difference between what producers charge & what ppl are willing to pay |
|
T/F marginal utility eventually decreases to zero |
True - do you really want 800 ice cream cones? |
|
Industry |
all the firms that produce the same product |
|
# of firms is ________ fixed in short run, _________ in long run |
fixed, variable |
|
When is profit maximized? |
When marginal cost = marginal revenue |
|
characteristivcs of monopoly marketplace (3) |
1 firm, barriers to entry, no substitutes |
|
Perfect competition: in the long run, profit = ? |
zero! |
|
Marginal revenue line in perfect competition |
same y-int, 2x slope of demand |
|
Cartel |
group who purposely keep production down to boost profit |
|
if technology allows more output to be produced with the same inputs, the supply curve... |
shifts to the right (more for sale at every price) |
|
Explain risk aversion using marginal utility |
the marginal utility of an extra dollar decreases as more income is received. |
|
When marginal product of labour equals average product of labour at a given (positive) labour, (MPL = APL) then the average product of labour: |
is at a maximum |
|
When does MC = ATC? |
when ATC is at its minimum |
|
In perfect competition, P = _______ |
MC |
|
MRS |
marginal rate of substitution (how willing am I to give up chocolates to get cookies?) |
|
Profit = (Price - ??) * # units |
average total cost |