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微經 | ECON > Chap. 1 2 3 > Flashcards

Chap. 1 2 3 Flashcards

1
Q

A science that studies humans & societies use resources to produce goods & service to satisfy wants/needs

A

Economics

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2
Q

Statement that can be verified with empirical data

A

Positive Statement

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3
Q

Statement based on person’s
belief or value

cannot be verified

A

Normative Statement

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4
Q

Scientific method to construct
Economic Theory

A
  1. Hypothesis
  2. Define Terms / State Assumptions
  3. Test w/ data
  4. Accept / Reject / Modify theory
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5
Q

Economics studies how major components of an economy interact

A

Macroeconomics

e.g. Unemployment / Inflation / Gov policies / Int rates

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6
Q

Economics studies outcomes of decisions by people/firms

A

Microeconomics

E.g. Supply & demand / Cost & price of good / Market structure / Monopolies

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7
Q

4 Economic Resources

A
  1. Labour
    Human mental & physical effort
  2. Land
    Natural resource to produce goods & services
  3. Capital
    Plant/Equipment/Building/Tools for production
  4. Enterprise
    Human to innovate and take risks
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8
Q

Payments for Economic Resources

A
  1. Labour → Wages
  2. Land → Rent
  3. Capital → Interest
  4. Enterprise → Profit
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9
Q

The value of the
Next-Best Alternative
given up for
the other choice

A

Opportunity Cost

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10
Q

Products used by consumers to satisfy wants & needs
Only consumers buy

A

Consumer
Goods & Services

E.g. Pizza

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11
Q

PPE used to make goods for sale
Only firms & gov buy

A

Capital Goods

E.g. Machinery

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12
Q

2 Efficiencies

A
  1. Productive Efficiency
    Production of an output at Lowest Possible Avg Cost
  2. Allocative Efficiency
    Production of combination of outputs that Best Satisfies Society & Consumers’ Demands
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13
Q

5 Methods of
Allocative Efficiency

A
  1. First come, first served
  2. Lottery
  3. Sellers’ preference
  4. Gov decree
  5. Market
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14
Q

Difference of
If-No-Trade and If-Traded

A

Benefit of Trade

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15
Q

3 Fundamental Questions for all economic societies

A
  1. What to produce
  2. How to produce (tech)
  3. For Whom to receive (distribution)
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16
Q

4 Types of Economies

A
  1. Co-operative
    Foraging, egalitarian, no hierarchy/leader/army
    (Kibbutz)
  2. Command
    Totalitarian (elite group)
  3. Customary
    Traditional/Religious
    Landowners (royalty/aristocracy/church)
  4. Competitive
    Market
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17
Q

A graphical representation of combinations of
maximum output
that can be produced from available resources/tech

A

Production Possibilities Model

Assumptions:
1. Full employment
2. Best tech
3. Productive efficiency

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18
Q

Law of Increasing Costs

A

Economy’s
total production level of
particular item ↑
→ Per Unit Cost of
additional unit ↑

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19
Q

Heart of Economics
(3 factors)

A

Scarcity
Choice
Opportunity Cost

(COS)

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20
Q

Production Possibilities Model illustrates

A

Choice
Efficiency
Opportunity Cost
Unemployment

(CEOU)

21
Q

Mechanism that allows buyers/sellers to exchange products/services

A

Market

22
Q

Relationship between various
prices & quantities that
consumers/suppliers are willing/able to buy/produce

A

Demand/Supply

23
Q

Motivation of consumers and producers in The Wealth of Nations - Adam Smith

A

Self-interest

24
Q

Most important determinant of Demand

A

Price

25
Q

Motivation of Supply

A

Profit

26
Q

Demand/Supply Schedule contains

A
  • Price per Case
  • Quantity Demanded/Supplied
27
Q

Reasons of
Downward Slopes
of Demand Curve

A
  1. Income effect
    Effect of a Price Change on Real Income, and on Quantity Demanded
    商品價格對消費者真實可支配收入及需求量的影響
  2. Subsitution effect
    Effect of Change in Relative Prices of a Product and its Substitute
    商品價格變化對其替代品需求量的影響
28
Q

Cause of Movement along Demand/Supply Curve

A

Price Change

29
Q

When
1. Prices ABOVE Equilibrium
2. Prices BELOW Equilibrium

A
  1. Surplus
  2. Shortage
30
Q

Determinants of Demand:
Cause change in Demand
(Quantity Demanded at each price changes)

A

Factors Other than Price
1. Consumer Preferences
2. Consumer Incomes
3. Prices of Related Products
substitute/complimentary
4. Expectations of Future
(in Prices/Income/Availablity)
Expected future $ ↑
→ Sold ↑ now
5. Population Size / Income & Age Distribution

Assumed to be constant when drawn

31
Q

When income rises, consumers
buy more __ products &
buy less __ products

A

Normal Products ;
Inferior Products

32
Q

2 Types of
Related Products

A
  1. Substitutes
    Products can be substituted for each other.
    Product price ↑ → Substitute demand ↑
  2. Complements
    Tend to be bought together.
    Product price ↑ → Substitute demand ↓
33
Q

Equilibrium price & quantity are determined by

A

Interaction between buyers & sellers

34
Q

2 Equilibrium Outputs

A

Quantity Supplied &
Quantity Demanded

35
Q

Determinants of Supply:
Cause change in Supply
(Quantity Supplied at each price changes)

A
  1. Prices of Resources
    Resource $ ↑ → Supply ↓
  2. Gov Taxes & Subsidies
    Tax ↑ → Supply ↓
    Subsidy ↑ → Supply ↑
  3. Technology
    Tech ↑ → Production Cost ↓ & Supply ↑
  4. Prices of Substitutes in Production
    Product $ ↑ → Supply of Sub in Production ↓
  5. Future Expectation of Suppliers
    Expected future $ ↓ → Supply ↑
  6. Number of Suppliers
    Suppliers # ↓ → Supply ↓
36
Q

When Demand/Supply change together, the effect of Price/Quantity is

A

Indeterminate or
Inconclusive

37
Q

When Demand ↑
& Supply ↑

Price __ Qty __

A

Price ? Qty↑

38
Q

When Demand ↓
& Supply ↓

Price __ Qty __

A

Price ? Qty↓

39
Q

When Demand ↑
& Supply ↓

Price __ Qty __

A

Price↑ Qty ?

40
Q

When Demand ↓
& Supply ↑

Price __ Qty __

A

Price↓ Qty ?

41
Q

3 Problems with Markets

A
  1. Markets adjust NOT quickly
  2. Markets results NOT equitable
  3. Competitve Markets NOT for some goods/srv.
42
Q

Price Control

A

Gov regulates $
incl.
1. Price Ceiling
2. Price Floor
3. Quota
4. Taxes
incl. Carbon tax
5. Subsidies
per unit produced
promote economic/social policy

43
Q

Price Ceiling
1. __ equil. $
2. cause

A
  1. < equil. $
  2. Shortage & black market

E.g. Rent

44
Q

Price Floor
1. __ equil. $
2. cause

A
  1. > equil. $
  2. Surplus
    & gov buys it

E.g. min. wage/agricultural

45
Q

How to Allocate Scarcity/Shortage

A
  1. Market
  2. Lottery
  3. First come, first serve
  4. Preference of producers
  5. Rationing by gov
46
Q

Surpluses will be

A
  1. Stored
  2. Converted
  3. Sold abroad (Dumped at low $)
  4. Donated
  5. Destroyed

SCDDD

47
Q

Quota
1. __ equil. $
2. cause

A

Restricting production output

  1. > equil. $
  2. Price ↑ without Surplus
48
Q

How
1. Taxes
2. Subsidies
impact supplies

A

Supplies are

  1. ↓ by Taxes
    ⇒ Supp Crv ↑
  2. ↑ by Subsidies
    ⇒ Supp Crv ↓

微經 | ECON (8 decks)

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