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Micro Econ > Micro Final > Flashcards

Micro Final Flashcards

1
Q

PPB

A

production possibility boundary - amount of resources possible to produce
- can shift with changes in technology, price of resources or production

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2
Q

positive

A

statement that can be proven/fact based

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3
Q

normative

A

statement that is opinion based

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4
Q

absolute advantage

A

can produce greater quantity or mangnitude

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5
Q

comparative advantage

A

can produce with lower opportunity costs than other country

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6
Q

specialization

A

will specialize where they have lower comp. advanange

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7
Q

trade

A

you must give away less than it would cost you to produce yourself

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8
Q

demand

A

price change causes shift along demand curve (Qd)

- shifts in curve = consumer income, compliments, substitues

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9
Q

compliments

A

purchased with a product (printer and ink)

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10
Q

substitutes

A

ex. pepsi and coke

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11
Q

supply

A

shifts due to technology, tax, entry/exit

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12
Q

Equalibrium

A

set supply = to demand, solve for P sub back in to find q

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13
Q

Tax

A

subtract from entire supply equation

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14
Q

Elasticity of demand

A

change in Q relative to P

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15
Q

inelastic demand

A

not responsive to change in price (less than 1)

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16
Q

elastic demand

A

very responsive to change in price (greater than 1)

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17
Q

inelastic supply

A

not responsive to change in price

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18
Q

elastic supply

A

very responsive to change in price

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19
Q

percentage change

A

% change in Q/ % change in P

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20
Q

Equation for when you have two points

A

(Q2-Q1/P2-P1) x ((P2+P1/Q2+Q1)

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21
Q

one point

A

change q/change p - this is slope of demand cureve x (p/q)

22
Q

greater than 1

A

elastic

23
Q

less than 1

A

inelastic

24
Q

normal goods

A

when income increases Qd increases

25
Q

inferior goods

A

when income increases Qd decreases

26
Q

giffin goods

A

inferior good where income effect is greater than substitution effect

27
Q

how to find if inferior or normal?

A

% change in Qd / % change in income —– + (normal), - (inferior)

28
Q

cross price elastity

A

% change Qd for goodx / % change in price for goodY

29
Q

to find percentage change in something

A

old demand - new demand / old demand

30
Q

Economic surplus

A

consumer and producer surplus together

31
Q

Price floors

A

minimum price set, creates a surplus

32
Q

price ceiling

A

maximum price set, creates a shortage

33
Q

quota

A

same as floor and celing but vertical

34
Q

deadweight loss

A

loss of economic surplus due to government intervention

35
Q

black market

A

go up to demand curve from the quantity being supplied to find price on the black market

36
Q

marginal utility

A

increases when consumption decreases, decreases when consumption increases

37
Q

budget line

A

plot all possbible purchases (like PPB)

38
Q

indifference curve

A

where it is tangent with budget line = purchase. Furtehr from origin the better

39
Q

to max utility or long run coss

A

MUx/Px = MUy/Py

40
Q

income and substitution effect

A
  1. draw budget line and indif curve (point A)
  2. draw new budget line and indif curve (point B)
  3. shift new budget line to tough old indifference curve (C)

Dis between A and C is substituion effect

Dis. between B and C is income effect

41
Q

If income and substituion move in same direction

A

normal good

42
Q

If income and substituion move in opposite direction s

A

inferior good

43
Q

marginal labour and capital

A

ML/MK decreases with more employees / capital

44
Q

Assumptions

A
  1. many sellers, 2. many buyers, 3. no differenciation 4. free entrance
45
Q

Perfect competition

A

many firms with same product.

  • zero profit
  • produce where MC = ATC
46
Q

Monopoly

A

price makers

  • produce where MC = MR and charge up to the demand curve
  • deadweight loss is between MC and demand
47
Q

Monopolistic competition

A

many small firms w different products and prices (setters)

  • SR = monopoly (MR = MC and charge P)
  • LR = firms enter shifting demand and Rev down until demand is tangent to ATC
48
Q

Game theory

A

make pay off matrix

49
Q

Nash equalibrium

A

scenario where NEITHER firms would change their strategy

50
Q

Dominant strategy

A

which strategy will maximize the payout for each firm regardless of what the other does?
- if it would change based on other firm there is no dominant strategy

Micro Econ (3 decks)

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