General Shite Flashcards
(5 cards)
1
Q
Equilibrium condition for compatible producers is
A
Product prices equal to value of marginal cost
P = MC
2
Q
income effect
A
that component of the total effect of a price change that results from the associated change in real purchasing power.
“you allow utility to change”
3
Q
substitution effect
A
that component of the total effect of a price change that results from the associated change in the relative attractiveness of other goods.
keeping utility const
4
Q
equation for elasticity
A
Delta Q / Delta P * P / Q
5
Q
lindahl equilibrium
A
everyone should pay their willingness to pay at the quantity of equilibrium
