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Spring Semester > Econ 101 Exam 2 > Flashcards

Econ 101 Exam 2 Flashcards

(64 cards)

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1
Q

As Price increases, the Quantity Demand decreases

A

Law of Demand

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2
Q

A general measure of responsiveness

A

Elasticity

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3
Q

The response of 1 valuable to changes in another valuable

A

Elasticity

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4
Q

Measures the responsiveness of QD to changes in the P

A

Price Elasticity of Demand

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5
Q

The % change in QD resulting from a 1% change in P

A

Price Elasticity of Demand

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6
Q

ED = ______/________

A

%change in QD/% change in P

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7
Q

ED= ______ - ________ / ______

A

new - old / old

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8
Q

When any event shifts S or D the equilibrium in the market ______.

A

changes

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9
Q

Compare old equilibrium to a new equilibrium

A

Comparative Statictics

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10
Q

Ed is always ______ because of the law of demand

A

negative

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11
Q

|ED| _____ as move down a linear, downturned-sloping D curve

A

decreases

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12
Q

Buyers + Sellers _____ prices up and down (like an auction)

A

‘bid’

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13
Q

There is only one price where _______ = _______

A

Quantity Supply = Quantity Demand

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14
Q

Equilibrium = _______ = ________

A

Quantity Supply = Quantity Demand

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15
Q

Equilibrium is also known as “________”

A

Market clearing price

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16
Q

There is _______ to change in equilibrium

A

no tendency

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17
Q

At any P not = to P*, QS _____ DS and there is disequilibrium

A

does not =

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18
Q

Excess supply

A

Surplus

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19
Q

Excess demand

A

Shortage

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20
Q

If P > P*, then QS _____ QD

A

>

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21
Q

There is _________ on the P + QS decreases and QD increases until QS = QD

A

downward pressure (surplus)

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22
Q

In a shortage there is ______ on the P.

A

upward pressure

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23
Q

3 Categories of ED:

A

1.Elastic Demand
2. Inelastic Demand
3. Unit Elastic Demand

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24
Q

|ED| > 1

A

Elastic

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25
|ED| < 1
Inelastic
26
|ED| = 1
Unit Elastic
27
%change in QD > %change in P
Elastic
28
%change in QD < %change in P
Inelastic
29
%change in QD = %change in P
Unit Elastic
30
What is this an example of? Ex.- A 10% increase in P, 20% decrease in QD
Elastic Demand
31
What is this an example of? Ex.- A 10% increase in P, 5% decrease in QD
Inelastic Demand
32
What is this an example of? Ex.- A 10% increase in P, 10% decrease in QD
Unit Elastic
33
ED is especially important to _______ because changes in P affect their Total Revenue.
Producers
34
Total amount you receive from selling a good or service
Total Revenue
35
TR = _____ x ______
Price x Quantity
36
When P increases TR _____
increases
37
As the P increases, QD decreases, so sell fewer units = TR ______
decreases
38
What happens to TR when P increases?
Depends on ED
39
What does TR equal if Tacos cost $2 and you sell 125 of them?
2 x 125 = 250
40
- Straight line D curve - Constant slope - ED varies
Linear Demand Curve
41
Don't classify a demand curve as _______.
elastic or inelastic
42
Don't confuse slope for _______
Elastic
43
ED = infinity / small
Perfectly Elastic Demand
44
Consumers don't tolerate changes in P, assuming perfect substitutions
Perfectly Elastic Demand
45
When P changes consumers may not buy at all.
Perfectly Elastic Demand
46
ED = 0
Perfectly Inelastic Demand
47
Price is no object, QD does not change when P changes
Perfectly Inelastic Demand
48
ED = 0 until a certain price
Perfectly Inelastic Demand
49
Availability of Substitutes = ED is _______
greater; more elastic
50
- More substitutes available - More similar the substitutes are
ED is greater (more elastic)
51
ED is greater (more elastic) depends on ____
how the market is defined (narrow or broad)
52
Narrow def. = more subs, so ED is ______
more elastic
53
Broad def. = less Subs, so ED is ______
less elastic
54
What are these examples of? Ex.- bananas, jeans, chicken, and Ben & Jerry's
Narrow Def.
55
What are these examples of? Ex.- fruit, meat, clothes, ice cream
Broad Def.
56
If a good is a large part of budget and P increases, ______
More elastic
57
Necessity = ______
inelastic
58
Luxury = _____
elastic
59
longer periods of time = _____
more elastic
60
If a 5% increase in price leads to an 8% decrease in quantity demanded, demand is _______
elastic
61
If a firm raises the price of its product, its total revenue will _______
increase only if demand is price inelastic
62
Demand is elastic whenever price elasticity has an absolute value_______ 1
greater than
63
A perfectly elastic demand curve is _______.
a horizontal straight line
64
Consumers have a long time to adjust to a price change which makes the demand _____
more elastic

Spring Semester (32 decks)

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