multiple choice Flashcards
What is market = lib ?
what does an increase in demand trigger?
Relationship between Supp and Dem
inc. in dem increases = lib price and quantity spent
What causes a shift in demand curve? (5)
2. their income
What causes shift in supply curve? (5)
- resource prices
- producer expectations
Describe two types of price controls? both mandated by get!!
- celings = max price seller charge ex wage
2. floor= min price seller charge, ex min wage
purpose of ceilings and floors?
prevent market failure
describe market failure?
what are its causes? (2)
too many/ few resources used in production
causes: comp, income in=lity
what is externality ?
Cost or + for third party (unforeseen)
Give a positive and (-) externality?
(+)= vaccination (-) = pollution
What is elasticity ?
RESPONSiveness 2 price change
How to calc. price elasticity of demand? Ed=?
%change dem/ % change price
What is elastic dem?
%change in quant > % change in Pr.
Whats inelastic demand?
change of <1% in quant. den. in rest. to 1% change Pr.
Define total revenue?
income from sale good/ service
What is unitary elastic demand?
1%change in quant dem in resp. to 1% change in Pr
What is perfectly elastic?
dec. quant. 2 0!! for slight change in pr.
Whats perfectly inelastic?
no change in quant when price changes
What 3 things influence demand sensitivity ?
- avail. of subs
- prod. budget
- price changes/ Time
whats X elasticity of dem?
ratio of % change in quant. dem. 4 a good to change in price of ANOTHER good
What is tax incidence ?
more elastic who pays?
give an ex?
share paid by buyer/ seller
more elastic dem= more corp pays (if demand is greater than price change!)
Define utility ?
unit 2 measure utility from cons. a good
Total utility an amount of?
SATISFACTION from all units of good/ serv.
change in tot. ut. from +1 ADDITIONAL UNIT of good/ serve.
What 2 things does the law of diminishing marginal utility decrease as CONSUMP. INCREASES?
- Marg utility dec.
2. satisfaction dec.
Diff between (+) and normative economics?
(+)= verifiable, facts numbers norm= opition, ex- ''cut social contribution back to benefit economics''
Give an example of an INVERSE realationship?
as Price dec. quantity purchased increases!
Give an example of independent relationship?
hint : crazy woof woof!
1 variable changes other does not
ex- expenditure on rabies vaccination vs. annual income
What happens on a curve when price changes?
What happens when other than price changes?
When does SHIFT occur in curve? (2 scenarios)
- ONLY when ceteris Paribus assumption RELAX
2. 3rd variable NOT on axis changes
2 places income in=lity is greatest?
within the EU?
What is is Opportunity cost? give an example of high opp cost ?
best alt. sacrificed for chosen alt.
Ex vet degree
What is marg. analysis comparing? vs?
Benefits vs. COST of change
What is PROD. POSS. Curve?
max. combination of 2 outputs prod in pd time
LRG animal = EFF
sml- not attain