mr steeds theme 1 Flashcards
(25 cards)
basic economic problem
unlimited wants limited resources
4 economic agents
producers
consumers
goverment
workers
marginal
additional
Toal utility
Toal satisfaction for a given level of consumption
shift in demand
income
population
advertising
change in substitute
change in co mplementary good
becomes fashionable
shift in supply
wages
technology
natural factors
price elasticity of demand
responsiveness of demand to change in price
elastic
percentage change is greater than percentage change in price
inelastic
percentage change in demand is less than percentage change in price
ped equastion
%change in quantity demand /
%change in price
normal goods
demand rises as income rises and vice versa
inferior good
demand falls as income rises and vice versa
cross elasticity of demand formula
%changeQD of good A /
&changeP of good B
rationing function
demand increases supply and price driven up discourage demand and conserve resources
signalising function
rising prices demand decrease in consumer
incentive function
motivates producer/consumer to follow a course of action or change in behaviour
public good
by providing for one its providing for everyone e.g streetlights
non excludability
benefits derived from pure public goods cannot by conflicted solely for those who have paid for it
non rival consumption
consumption by one consumer does not restrict consumption by other consumers
non rejectable
the collective supply of public good for all means that it cannot be rejected by people
free rider problem
people benefit from the provision of the goods and service without paying for it
quasi public good
near public good
semi non rival
semi non excludability
e.g. beach
merit goods
goods and services that the government fells that people will under consume
principle agent
arrangment in which one entity legally appoints another to act on its behalf occurs due to imperfect information
