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Econ 101 > Exam 1 flashcards > Flashcards

Exam 1 flashcards

1
Q

Resources

A

the instruments used to produces goods and services, including both natural and other resources

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2
Q

What is economics

A

the study of the allocation of our scares resources

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3
Q

Capital

A

something that is used to produce other goods

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4
Q

factors of production

A

land, labor, natural resources, capital, and e ship

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5
Q

Entrepreneurship

A

willingness and ability to combine factors of production into productive enterprise

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6
Q

Natural resources

A

preexisting “gifts of nature” in an economy

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7
Q

Scarcity

A

a situation in which there is not enough of something to satisfy the desire for it.

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8
Q

how are scares resources allocated in modern economies

A

market, central, and mixed economies

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9
Q

Market economy

A

based on the predominance of private ownership of firms and limited government control, EX) Canada and Japan

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10
Q

Central economy

A

More government control and lower incomes ex North Korea or china

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11
Q

Positive economies

A

deals with statements of FACTS and what is

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12
Q

Negative

A

deals with what SHOULD be, and what ought

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13
Q

The Marginal concept

A

a change in a dependent variable caused by a one unit incremental increase in an independent variable

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14
Q

marginal cost

A

the change in total cost brought about by one unit increase in output (change in total cost/change in quantity)

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15
Q

marginal revenue

A

the change in total revenue brought about by a one unit increase in output (change in total revenue/ change ion quantity)

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16
Q

Ceteris Paribus

A

other things being equal, EX: gas prices should rise if oil prices rise

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17
Q

Opportunity cost

A

the value of the best forgone alternative/ opportunity of any decision, (budget/price of an item)

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18
Q

What will cause a shift in the PPF

A

FOPS: land, labor, capital, natural resources, and e ship

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19
Q

types of capital

A

Physical ( machines and tools), human(skills and knowledge), financial(stocks, bonds, and cash), social ( connections and quality), moral( ethics and morals)

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20
Q

What will cause movement around the PPF

A

changes in the allocation of time or resources devoted to producing a specific good or service, relative to other goods and services.

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21
Q

Comparative advantage

A

the ability to produce a good or service at a lower opportunity cost then other producers

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22
Q

Ricardian trade theory

A

if there are two trading partners with different opportunity costs (comparative advantage) then there exists a term of trade at which both parties are made at least well of by specializing and trading with one another

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23
Q

Absolute advantage

A

the ability to produce a good or service using fewer resources then other producers

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24
Q

Principle of increasing cost

A

to produce an increasing amount of a good a supplier must give up greater and greater amounts of another good

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25
Q

Demand

A

the amount buyers are willing and able to buy. demand does not equal want

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26
Q

Quantity demanded

A

the amount that buyers would be willing and able to buy at a specific price, over a specific period of time.

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27
Q

what is PIPTE

A

population of buyers, income of buyers, prices of related goods, taste and preference of buyers, expectations of future prices and incomes.

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28
Q

Law of demand

A

As price of a good or service increases the quantity demanded falls

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29
Q

Change in demand

A

At any given price buyers would be willing and able to buy either more or less then initially(the whole curve would shift)

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30
Q

Population of buyers(P)

A

an increase of population means an increase in demand

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31
Q

Income of buyers(I)

A

increase in income more normal goods and services increase but inferior goods and services decrease. EX: if incomes rise the demand for steak will goo up and demand for ground chicken will go down

32
Q

Price of related goods(P)

A

price of substitutes increase demand for original good increase, price of compliment increase then demand for original price will decrease

33
Q

taste in preference of buyers(T)

A

if taste in preference for a good or service increases then demand will increase because buyers will want the good or service more

34
Q

Expectation of future prices or incomes (E)

A

if prices are expected to increase then buyers will be more able and willing to buy to the demand would increase, if incomes are expected to increase then demand for normal goods increase but demand for inferior goods decrease.

35
Q

Arbitrage

A

the ability to buy low in one market and sell high in another

36
Q

Sam bankman fried

A

made millions from arbitrage and was founder of FTX

37
Q

Peter singer

A

utilitarian who came up with the theory of if a child is drowning will you go and save it even if it means you will ruin your phone or clothes? yes you would but what about the kids dying in ponds all around the world. was a found of effective altruism with will Macalister

38
Q

William Macaskill

A

bigger advocated and protagonist for effective altruism

39
Q

Subsitirity

A

the principle were a decision should be made more small or local setting not on as big of a scale

40
Q

Supply

A

the amount that sellers are willing and able to sell at each of all possible prices for the product

41
Q

TIPSE

A

Technology, input prices, prices of related goods in production, number of sellers, expected future prices

42
Q

Quantity supplied

A

the amount that sellers would be willing and able to sell at a specific price over a specific period of time. (think of this as a point)

43
Q

Law of supply

A

as a price of a good or service increases the quantity supply increases

44
Q

Change in supply

A

at any given price, sellers are willing and able to sell either more or less than before(whole curve shift)

45
Q

Technology(T)

A

if technology increase, then the efficiency of production increase, which helps supply more of a good or service, so the supply would increase

46
Q

Input(I)

A

if input prices decrease then cost of production decrease so supply would increase.

47
Q

Price of related good in production(P)

A

A and B are substitutes, so if B increases in demand sellers will want to make more of B which means Demand for A decrease and so does supply

48
Q

Sellers (number of )(S)

A

increase in number of sellers means increase in supply.

49
Q

Expected future prices (E)

A

in prices are expected in increase means supply will go down in the future

50
Q

Equilibrium

A

a situation in which neither buyers or sellers have an incentive to change their behavior

51
Q

Price ceiling

A

a legal maximum on the price that may be charged for commodity (you cannot charge above the price ceiling)(on the bottom half of the equilibrium)

52
Q

Price floor

A

a legal minimum on the price that may be charged for commodity

53
Q

Implications of price ceilings

A

there will be constant shortages, black market sales may rise

54
Q

Example of price ceiling

A

rent control means there will be shortages of good rental units available or you can only charge $15 for medicine means there could be a shortage of the medicine

55
Q

Implication of price floors

A

many surpluses, under the table sales will rise, disguised discounts, waste will increase, over investment in industries.

56
Q

example of price floor

A

if you work for minimum wage

57
Q

Non binding price floor or ceiling

A

a price floor or ceiling that falls below or above the equilibrium price level, and so has no impact on the market

58
Q

Elasticity

A

is the %change in one economic variable in response to a 1% change in another economic variable, where the variable doing the causing is in the denominator (Ep=%change in quantity/%change in price)

59
Q

Elastic demand

A

quantity demanded is VERY SENSITIVE to price changes, IEpI>1, graph and slope are flat

60
Q

Unit elastic demand

A

a 1% change in price is exactly off set by 1% change in quantity demanded IEpI = 1, graph and slop are around 45 degree angle

61
Q

inelastic demand

A

quantity demanded is NOT VERY SENSITIVE to price changes. IEpI<1. graph and slope are very stee. Ex, prices on medicine are inelastic because people need deferent medicines and are willing and able to pay more

62
Q

Ep equation

A

Q2-Q1/P2-P1 * P1+P2/Q1+Q2

63
Q

% change in quantity and %change in price equation

A

Q2-Q1/(Q1+Q2/2) *100
P2-P1/(P1+P2/2) *100

64
Q

where in a demand curve is the it more elastic

A

at the top of the graph it is most elastic and bottom is inelastic

65
Q

Total revenue equations

A

TR=P*Q
%change in TR= %change in P+%change in Q

66
Q

total revenue note

A

if %change in TR is negative the TR has decreased and vise versa if TR is positive

67
Q

What effects elasticity of demand

A

available substitutes, narrowness of the market(soda vs coke, there are many more sodas to choose from but there is only a few types of coke), type of good (demand for necessary items are more inelastic), Time between purchase and consumption of good, proportion of total income( if the price off salt doubles from .5 to $1 it is not that big of a deal but if a car double from 25k to 50k its a much bigger deal).

68
Q

Income elasticity of demand

A

The responsiveness of demand for product to a 1% change in income. (Ey=%change in quantity/%change in y)(y=income) if Ey<0 then the good in inferior (Ex. if incomes rise 1% then QD of ground beef decreases) but if the Ey>0 then the good is normal(EX: if incomes rise by 1% then QD of steak increases)

69
Q

Necessity goods

A

0<Ey<1, example of necessity goods are food, college education, cigarettes, pork, etc)

70
Q

Luxury goods

A

Ey> 1, example are fresh fruit, travel, recreation and clothes

71
Q

inferior goods

A

Ey<0, bread, potatoes, ground beef

72
Q

Cross Price Elasticity of Demand and equation

A

sensitivity of QD of good (Y) to a 1% change in price of good (X), Ecp= 5change in Qy/%change in Px

the way that changes in the price of one good can affect the quantity demanded of another good.

73
Q

Ecp>0

A

then x and Y are substitutes

74
Q

Ecp=0

A

then x and Y are unrelated

75
Q

Ecp<0

A

then X and Y are compliments

Econ 101 (6 decks)

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