Blackstock test 1 microeconomics 202 Flashcards
(142 cards)
1
Q
define economics
A
the study of how a society uses its scarce resources to supply the insatiable wants and needs of said society both now and in the future
2
Q
the study of how a society uses its scarce resources to supply the insatiable wants and needs of said society both now and in the future
A
economics
3
Q
define need
A
something that must have, or you will die
4
Q
something that must have, or you will die
A
need
5
Q
define want
A
something that will make life better, but you won’t die if you don’t have it
6
Q
something that will make life better, but you won’t die if you don’t have it
A
want
7
Q
define a good
A
any tangible item which satisfies the criteria of a want or need
8
Q
any tangible item which satisfies the criteria of a want or need
A
good
9
Q
define a service
A
any intangible, but useful activity which meets the criteria of a want or need
10
Q
any intangible, but useful activity which meets the criteria of a want or need
A
service
11
Q
what do economists do?
A
in a broad sense, they study human action
12
Q
in a broad sense, they study human action
A
what economists do
13
Q
define praxeology (Greek word)
A
study of human action
14
Q
study of human action
A
praxeology (Greek word)
15
Q
areas of economics
A
-marketing
-accounting
-management
-finance
16
Q
-marketing
-accounting
-management
-finance
A
areas of economics
17
Q
what are Econ majors taught?
A
they’re taught to be real-life problem solvers through the scientific method
18
Q
they’re taught to be real-life problem solvers through the scientific method
A
Econ majors
19
Q
Incentives matter because…
A
they can come in the form of a rewards or a threat of violence
20
Q
they can come in the form of a rewards or a threat of violence
A
incentives
21
Q
positive analysis
A
claims that attempt to describe the world as it is
22
Q
claims that attempt to describe the world as it is
A
positive analysis
23
Q
normative analysis
A
claims that attempt to describe the world as it should be, or as people believe it so to bo (without supporting evidence)
24
Q
claims that attempt to describe the world as it should be, or as people believe it so to bo (without supporting evidence)
A
normative analysis
25
define ceteris paribus (Latin word)
all other things held equal
26
all other things held equal
ceteris paribus (Latin word)
27
define market
the coming together of buyers and sellers whose joint decisions determine the price
28
the coming together of buyers and sellers whose joint decisions determine the price
market
29
what are the factors of production
-land
-labor
-capital
-technology
(TLLC)
30
-land
-labor
-capital
-technology
(TLLC)
factors of production
31
define consumer goods
the things we, as consumers, buy and bring home
32
the things we, as consumers, buy and bring home
consumer goods
33
define capital goods
tools and machines used to make consumer goods
34
tools and machines used to make consumer goods
capital goods
35
what is cartesian graphing?
a system that tells you your exact position on a graph (the graphs we've been doing since middle school)
36
a system that tells you your exact position on a graph (the graphs we've been doing since middle school)
cartesian graphing
37
who is Renee Decart?
a French mathematician who invented cartesian graphing
38
a French mathematician who invented cartesian graphing
Renee Decart
39
Production possibilities frontier
a graph which shows the combinations of output that the economy can possibly produce given the available land, labor, capital, and technology (the normal graphs we've been doing in class)
40
a graph which shows the combinations of output that the economy can possibly produce given the available land, labor, capital, and technology (the normal graphs we've been doing in class)
production possibilites frontier
41
define opportunity cost
what you give up when you make a choice
42
what you give up when you make a choice
opportunity cost
43
opportunity cost formula
explicit costs + implicit costs
44
explicit costs + implicit costs
opportunity cost formula
45
define explicit costs
actual out-of-pocket expenses
46
actual out-of-pocket expenses
explicit costs
47
define implicit costs
costs that do not include contractual payments
48
costs that do not include contractual payments
implicit costs
49
define absolute advantage
when one country can produce more than another country in absolute terms
50
when one country can produce more than another country in absolute terms
absolute advantage
51
define autarky
no trade (you only have what you made for yourself)
52
no trade (you only have what you made for yourself)
autarky
53
opportunity cost formula
what you must give up / what you want
54
what you must give up / what you want
Opportunity cost formula
55
define comparative advantage
the ability to produce at a lower opportunity cost then a competitor
56
the ability to produce at a lower opportunity cost then a competitor
comparative advantage
57
what are the 2 ways a country can move beyond its PPF?
-technological advances
-trade
58
-technological advances
-trade
2 ways a country can move beyond its PPF
59
trade will make both countries better. TF?
true
60
trade will make both countries worse. TF?
false
61
what's the difference between a formula and an equation?
formula is the general guide, and equation is the formula with correctly plugged in numbers
61
define quantity demanded
the amount of a good or service which will be purchased at a specific price
62
the amount of a good or service which will be purchased at a specific price
quantity demanded
63
define demand
the amount of a good or service which will be purchased at any given price
64
the amount of a good or service which will be purchased at any given price
demand
65
define law of demand
as price rises, quantity demanded falls and as price falls, quantity demanded rises, ceteris paribus
66
as price rises, quantity demanded falls and as price falls, quantity demanded rises, ceteris paribus
law of demand
67
the change in price is the cause, the change in quantity is the effect. TF
true
68
the change in quantity is the cause, the change in price is the effect. TF
false
69
what direction is demand's slope?
downward
70
what direction is supply's slope?
upward
71
an increase in supply or demand is a shift...
to the right
72
a decrease in supply or demand is a shift...
to the left
73
5 common reasons demand will change
-change in tastes or preferences
-change in expectations
-change in laws
-change in income
-change in the price of other goods
(top lie pog)
74
-change in tastes or preferences
-change in expectations
-change in laws
-change in income
-change in the price of other goods
(top lie pog)
5 common reasons demand will change
75
when income rises, demand for ____ ____ will also rise and vice versa
normal goods
76
what income falls, demand for ____ ____ will also rise and vice versa
inferior goods
77
define substitutes
goods that are purchased instead of another good
78
goods that are purchased instead of another good
substitutes
79
define complements
two goods that are purchased together; when the price of GOOD A rises, demand for GOOD B falls and vice versa
80
two goods that are purchased together; when the price of GOOD A rises, demand for GOOD B falls and vice versa
complements
81
normal substitutes
close enough (Papa John's and Johnny's)
82
perfect substitutes
consumers can't tell the difference (which electrical company you use)
83
imperfect substitutes
goods which satisfy an end goal, but have vastly different marginal rules (traveling by plane or car)
84
define the law of supply
when price rises, quantity supplied also rises, and vice versa (ceteris paribus)
85
when price rises, quantity supplied also rises, and vice versa (ceteris paribus)
law of supply
86
define quantity supplied
the amount of a good or service which will be produced at a specific price
87
the amount of a good or service which will be produced at a specific price
quantity supplied
88
define supply
the amount of a good or service which will be produced at any price
89
the amount of a good or service which will be produced at any price
supply
90
4 common reasons supply will change
-change in input prices
-change in technology
-change in expectations
-change in the number of sellers
(nose tip)
91
-change in input prices
-change in technology
-change in expectations
-change in the number of sellers
(nose tip)
4 common reasons supply will change
92
define shortage
when quantity demanded is greater then quantity supplied at a specific price
93
when quantity demanded is greater then quantity supplied at a specific price
shortage
94
define equilibrium
when quantity demanded equals quantity supplied and there are no unintended shortages or surpluses
95
when quantity demanded equals quantity supplied and there are no unintended shortages or surpluses
Equilibrium
96
define surpluses
when quantity supplied is greater than quantity demanded at a certain price
97
when quantity supplied is greater than quantity demanded at a certain price
surpluses
98
define elasticity
a measure of the responsiveness of an economic agent to a change in a variable
99
a measure of the responsiveness of an economic agent to a change in a variable
elasticity
100
elasticity demand formula
% change in quantity demanded / % change in price
101
% change in quantity demanded / % change in price
elasticity demand formula
102
rules of elasticity
if absolute value of answer is...
-greater than 1, elastic
-equal to 1, unitary elastic
-less than 1, inelastic
103
define inelastic
consumers are fairly responsive to a change in price
104
consumers are fairly responsive to a change in price
inelastic
105
define elastic
consumers are fairly unresponsive to a change in price
106
consumers are fairly unresponsive to a change in price
elastic
107
define price elasticity of demand
a measure of the responsiveness of a consumer to a change in price
108
a measure of the responsiveness of a consumer to a change in price
define price elasticity of demand
109
elements which help determine elasticity
-availability of close substitutes
-necessities vs. luxuries
-definition of market
-time horizon
110
what groups are most interested in elasticities?
-sellers
-government
111
midpoint method formula
(Q2-Q1)/[(Q2+Q1)/2]
---------------------------
(P2-P1)/[(P2+P1)/2]
112
(Q2-Q1)/[(Q2+Q1)/2]
---------------------------
(P2-P1)/[(P2+P1)/2]
midpoint method formula
113
define cross-price elasticity of demand
a measure of the responsiveness of consumers to a change in the price of another good
114
a measure of the responsiveness of consumers to a change in the price of another good
cross-price elasticity of demand
115
how do you know if it's a substitute or a complement?
if your answer, before taking absolute value is positive, it's a substitute; if it's negative, it's a complement
116
define income elasticity of demand
a measure of the responsiveness of consumers to a change in income
117
a measure of the responsiveness of consumers to a change in income
income elasticity of demand
118
how do you know if it's an inferior or normal good?
if the answer is positive, it's normal; if it's negative, it's inferior
119
the person who most highly values the good receives it. TF
T (this is a good economic phrase)
120
the person who most highly values the good does not receive it. TF
F
121
define price ceiling
the maximum, legal price which can be charged for a good or service
122
the maximum, legal price which can be charged for a good or service
price ceiling
123
3 facts about price ceiling
- an effective price ceiling always lies below equilibrium
- an effective price ceiling always causes a shortage
- an effective price ceiling always hurts the community in the long run
124
3 facts about price floor
- an effective price floor always lies above equilibrium
- an effective price floor always causes a surplus
- an effective price floor always hurts the community in the long run
125
define price floor
a minimum legal price which can be charged for a good or service
126
a minimum legal price which can be charged for a good or service
price floor
127
elasticity demand formula (normal method)
(Q2-Q1) / Q1
----------------
(P2-P1) / P1
128
(Q2-Q1) / Q1
----------------
(P2-P1) / P1
elasticity demand formula (normal method)
129
define excise tax
a tax charged on goods produced within a country (effects producer)
130
a tax charged on goods produced within a country (effects producer)
excise tax
131
if the demand curve is more inelastic than the supply curve...
then consumers will have to pay more tax
132
if the demand curve is more elastic than the supply curve...
then producers will have to pay more tax
133
define consumers' surplus
the amount that consumers' were willing to pay for a good or service but did not have to.
134
the amount that consumers were willing to pay for a good or service but did not have to.
consumers surplus
135
define producers' surplus
the producers' total revenue minus the producers' opportunity cost
136
walk through calculating supply and demand
1) demand and supply equations will be given
2) set them equal to 0 and solve to get demand and supply intercepts
3) set demand and supply equations equal to each other to get equilibrium price
4) plug in equilibrium price into demand and supply equations to get equilibrium quantity (the new numbers should be equal)
5) equilibrium quantity x .5 x the difference between demand intercept and equilibrium price (to find consumers' surplus) OR equilibrium price and supply intercept (to find producer's surplus)
6) equilibrium price x equilibrium quantity = total revenue
7) total revenue - producers' surplus = producers opportunity cost
137
define tariff
a tax placed on imported goods
138
a tax placed on imported goods
tariff
139
from 0 to QS is the amount our domestic ____ ____
producers produce
140
from 0 to QD is the amount domestic ____ ____
consumers purchase
141
what if there are leftovers of 0 to QS or 0 to QD ?
they are exported
