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Jahrdenas_GEAS > Economics > Flashcards

Economics Flashcards

(74 cards)

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1
Q

When the income increases, this property of a product defines if the allotment of budget for this product decreases or increases

A

Income Elasticity

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2
Q

When Income Elasticity is Greater than 1:

As Income increases, the percentage of the income allotted for purchasing this product ______

A

Increases

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3
Q

When Income Elasticity is Less than 1:

As Income increases, the percentage of the income allotted for purchasing this product ______

A

Decreases

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4
Q

A Necessity Product has an Income Elasticity of _____

A

I.E. < 1

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5
Q

A Luxury Product has an Income Elasticity of _____

A

I.E. > 1

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6
Q

Define the Sellers and Buyers for this market situation:

Perfect Competition

A

Sellers: Many
Buyers: Many

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7
Q

Define the Sellers and Buyers for this market situation:

Monopoly

A

Sellers: One
Buyers: Many

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8
Q

Define the Sellers and Buyers for this market situation:

Monopsony

A

Sellers: Many
Buyers: One

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9
Q

Define the Sellers and Buyers for this market situation:

Bilateral Monopoly

A

Sellers: One
Buyers: One

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10
Q

Define the Sellers and Buyers for this market situation:

Duopoly

A

Sellers: Two
Buyers: Many

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11
Q

Define the Sellers and Buyers for this market situation:

Duopsony

A

Sellers: Many
Buyers: Two

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12
Q

Define the Sellers and Buyers for this market situation:

Oligopoly

A

Sellers: Few
Buyers: Many

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13
Q

Define the Sellers and Buyers for this market situation:

Oligopsony

A

Sellers: Many
Buyers: Few

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14
Q

Define the Sellers and Buyers for this market situation:

Bilateral Oligopoly

A

Sellers: Few
Buyers: Few

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15
Q

A market situation wherein only one entity is assigned to produce a certain product/ provide a service to minimize the cost of the whole economy

A

Natural Monopoly

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16
Q

The Supply ______ when the number of units increases

A

Increases :v

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17
Q

The Demand ______ when the number of units increases

A

Decreases

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18
Q

The Supply ______ when the Price increases

A

Increases

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19
Q

The Demand ______ when the Price increases

A

Decreases

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20
Q

Define the Law of Supply and Demand

A

Under Perfect Competition, The Price of the Product is going to be the price where the supply and demand are equal

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21
Q

Define The Law of Diminishing Returns

A

Adding resources (ex. more employees) is only effective up to a certain point, the benefit of adding resources diminishes as you keep on adding that specific resource

“The Gain is not worth the Pain”

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22
Q

Interest that grows linearly; interest only bases its growth on initial principal/investment

A

Simple Interest

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23
Q

Formula for Simple Interest

A

I = P i n

P - Initial value/Principal
i - Interest Rate
n - Period of interest Rate

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24
Q

Formula for Future Cost of Simple Interest

A 
F  = I + P
F = P(1 + (i n))

I - Interest
P - Initial/Present/Principal Value
i - Interest Rate
n - Period of interest Rate

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25
Type of Simple Interest that assumes 30 days in one month
Ordinary Simple Interest
26
Formula for the period(n) of Ordinary Simple Interest
n = (#days elapsed) / 360
27
Type of Simple Interest that accounts for the exact number of days in a month, including leap years
Exact Simple Interest
28
Formula for the period(n) of Exact Simple Interest
n = (#days elapsed) / (365 OR 366(leap year))
29
How to determine if a year is a leap year?
If the year is divisible by 4, it is a leap year
30
How to determine if a year is a century year?
if a year ends with two zeroes (example, 1600, 1700, 2000), if it is divisible by 4, it is a century year, which is counted as a leap year
31
How to determine exact number of days in a year?
Use knuckles(31 for knuckle, 30 for crevice between knuckles): ``` Jan -31 Feb -28(exception to 31-30 rule) or 29(if leap year) Mar-31 Apr-30 May-31 Jun-30 July-31 Aug-31(start @ a knuckle for Aug) Sept-30 Oct-31 Nov-30 Dec-31 ```
32
Interest that grows exponentially; Interest from previous period is also subjected to the Interest Rate when compounded in the next period
Compound Interest
33
Formula for Future Value in Compound Interest
F = P(1 + i)^n P - present value i - interest rate n - Period of Interest Rate
34
Compound interest that compounds at every single instant of time (number of periods is infinite)
Continuous compound interest
35
Formula for Future Value in Continuously Compounded Interest
F = P e^(NR . N) P - Present Worth e - natural logarithm number NR - Nominal Rate (annual, to match 'N') N - Number of years
36
An Interest rate distributed throughout the whole year by 'm' portions
Nominal rate
37
If a nominal rate 'NR' is given, and is compounded 'm' times in a year, how do you interpret the growth of interest?
in one year, there are 'n' simple interests, with an interest rate of (NR/m), where every period applies the interest rate on the cumulative value of the account, including previous interests obtained
38
Formula for Future worth of Compound Interest using Nominal Rates
F = P ( 1+ (NR/m) )^m P - Present Worth NR - Nominal Rate m - # period divisions in a year
39
A rate that is observed in a yearly basis, As if the present worth is subjected to a simple interest rate from initial to final value
Effective rate
40
Formula for Effective Rate
ER = [ ( 1 + (NR / m) )^m ] - 1 P - Present Worth NR - Nominal Rate m - # period divisions in a year
41
when 'm' is not equal to 1, | Effective rate is ______ Nominal Rate
Greater than
42
when 'm' is equal to 1, | Effective rate is ______ Nominal Rate
Equal to
43
A uniform series of payments that occur at equal intervals of time
Annuity
44
An annuity where payments are made after each period
Ordinary Annuity
45
An annuity where payments are made before each period
Annuity Due
46
An annuity where the Series of payments are paid some time after the transaction is made
Deferred annuity
47
An annuity with an infinite number of uniform payments
Perpetuity
48
Formula for Present Worth of a Perpetuity
P = A / i A - annuity i - Interest Rate
49
Formula for the sum of annuity (AKA Future Worth of annuities)
S = A [ (1 +i)^n - 1 ] / i A - annuity i - Interest Rate n - # of periods NOTE: 'i' must match 'n' periods
50
Formula for the Present Worth of Annuity
``` P = S / [(1+i)^n] P = A [ (1 +i)^n - 1 ] / [ i ( 1 + i ) ^ n ] ``` S - Sum of annuities (Future Worth) A - annuity i - Interest Rate n - # of periods NOTE: 'i' must match 'n' periods
51
If 'i' does not match 'n', How do you convert into an 'i' that matches 'n'?
Shift Solve for 'i(new)': [(1 + NR/m(old))^m(old) ] - 1 = [(1 + i(new)/n(new) )]^n(new) - 1 NR - Nominal Rate m(old) - Period that does not match the number of annuities/interest rate i(new) - new 'i' to use in annuity formulas n(new) - new period that matches number of annuities/interest rate
52
An annuity still with equally spaced time intervals, but with non-uniform payments, where payments increases/decreases in every period, following a certain trend
Gradient
53
A gradient wherein the annuities' value increases in a linear manner
Arithmetic Gradient
54
A gradient wherein the annuities' value increases in an exponential manner
Geometric Gradient
55
Formula Present Worth of Gradient
Format of summation: ∑(Function , Lower Limit , Upper Limit) P = ∑( F(n) / [ (1+i)^n ] , 1 , Period end) F(n) - Future worth as a function of 'n', since annuity changes for every iteration (Form equation for F(n) at your own discretion)
56
A Depreciation Model that follows a linear manner of depreciation as time progresses
Straight Line Method
57
CALTECH: Straight Line Method
Use Stat mode A + Bx and plot ( 0 , First Cost), and then plot ( (period at salvage value), Salvage Value) and use Ybar for obtaining book value at a specific period
58
A Depreciation Model that depreciates at a constant Percentage annually
Declining Balance Method
59
Another term for Declining Balance Method
Matheson Formula
60
CALTECH: Declining Balance Method
Remember: Constant depreciation percentage (%d) Use Stat mode AB^x Simply Plot points given @ period 0, First cost @ period 1, (First Cost x (1-%d)) And use Xbar Ybar depending on what is asked for
61
A Depreciation Model that depreciates uniformly, like how an annuity uniformly increases ¯\_(ツ)_/¯
Sinking Fund Method
62
Formula for Sinking Fund Method
``` Use Stat mode AB^x 1st item will start with (period 0 , 1) 2nd item: (period 1 , [1 + (NR/m)]) In stat mode, use 'B' in Shift Stat Regression menu for: ``` (First Cost - Salvage Value) = d ∑( [B ^(x-1)] , 1 , final period) ∑ is a STAT Mode function d - annual Depreciation Cost(not percentage)
63
CALTECH: Double Declining Balance Method
Use Stat mode AB^x points given : @ period 0, First cost; @ period 1, (First Cost x (1 - {2/(Salvage year})) And use Xbar Ybar depending on what is asked for
64
A Depreciation Model which is an accelerated method for calculating an asset's depreciation. This method takes the asset's expected life and adds together the digits for each year
Sum of Year's Digit Method
65
CALTECH: Sum of Years Digit Method
Use Stat mode A+Bx+Cx^2 (Must have 3 plot points) points given : @ period 0, First cost; @ period 'L', (Salvage Value) @ Period 'L +1', (Salvage Value) And use Xbar Ybar depending on what is asked for
66
The Rate attributed to the depreciation of money value
Inflation Rate
67
Formula for Future worth, including inflation rate
F = P (1 + i)^n x 1 / (1+f)^n f - Inflation rate
68
Formula for Discount
``` d = 1 - (1 / (1+i)) i = d / (1-d) ``` d - rate of discount
69
CALTECH: Nominal to effective rate
Use Stat mode AB^x X column represents the periods in compounding (quarterly, etc) Y represents the grown value of money (starts af 1) 1st item will start with (period 0 , 1) 2nd item: (period 1 , [1 + (NR/m)]) And use (n Ybar) to find the effective rate after n periods
70
CALTECH: Ordinary Annuity
Use Stat mode AB^x 1st item will start with (period 0 , 1) 2nd item: (period 1 , [1 + (NR/m)]) Obtain 'B' in Shift Stat Regression, Then, type in calculator as is: ∑([B^(-x)] , A1 , Af) A1 -annuity period at first pay Af - annuity period at final pay Store as any value (lets say, at 'M') Finally, use in formula P = A x M P-Present Value A-Annuity M-Value of summation previously performed
71
CALTECH: Annuity Due
Same as Ordinary annuity, but use | ∑([B^(-x)] , (A1 - 1) , (Af - 1))
72
CALTECH: Future worth of Annuity
Following up on CALTECH of Annuity: F(@period n) = P(n(Ybar)) OR F(@period n) = ∑([B^(x-1)] , A1 , Af)
73
CALTECH: Present Value of Arithmetic Gradient
Use Stat mode AB^x 1st item will start with (period 0 , 1) 2nd item: (period 1 , [1 + (NR/m)]) Obtain 'B' in Shift Stat Regression, Then, type in calculator as is: P = ∑([A + G(x-1)]B^(-x) , 1 , period end) G - Change in Annuity/Cash Flow A - 1st annuity
74
CALTECH: Present Value of Geometric Gradient
Use Stat mode AB^x 1st item will start with (period 0 , 1) 2nd item: (period 1 , [1 + (NR/m)]) Obtain 'B' in Shift Stat Regression, Then, type in calculator as is: P = ∑([A(1 + g)^(x - 1)]B^(-x) , 1 , period end) g - Change in %annuity/Cash FLow A - 1st payment

Jahrdenas_GEAS (9 decks)

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