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Piece by piece Flashcards

(89 cards)

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1
Q

What role do prices play in a market?

A

They signal scarcity, provide incentives, and convey information.

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2
Q

What is perfect competition?

A

A market structure with many firms, identical products, and no barriers to entry.

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3
Q

What is marginal social benefit?

A

The total benefit to society from consuming an additional unit of a good, including externalities.

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4
Q

What are the key principles in economic decision-making?

A

Cost-benefit, opportunity cost, marginal, and interdependence principles.

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5
Q

What is market power?

A

The ability of a firm to influence market prices.

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6
Q

Define marginal revenue (MR).

A

The additional revenue from selling one more unit of a good.

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7
Q

What factors influence market shifts?

A

External factors like policy changes, economic trends, or consumer preferences.

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8
Q

What is a nonexcludable good?

A

A good that cannot easily exclude others from using it.

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9
Q

What is expected value?

A

The weighted average of all possible outcomes, based on their probabilities.

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10
Q

What is game theory?

A

The analysis of strategic interactions and decision-making in scenarios with multiple players.

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11
Q

What is the Tragedy of the Commons?

A

The overuse of a shared resource due to lack of ownership or regulation.

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12
Q

What are the main supply shifters?

A

Input prices, productivity and technology, prices of related outputs, expectations, type and number of sellers.

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13
Q

What is intergenerational mobility?

A

The ability of individuals to improve their economic status relative to their parents.

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14
Q

What is the role of elasticity in stocking decisions?

A

It helps predict changes in demand based on income or price shifts.

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15
Q

Define production possibilities frontier (PPF).

A

A graph showing the maximum possible combinations of two goods that can be produced.

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16
Q

What is the Market Basket Measure (MBM)?

A

Canada’s official poverty line, based on costs of basic needs for a family of 4.

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17
Q

Define Nash Equilibrium.

A

A situation where each player’s choice is the best response to the choices of others.

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18
Q

Define marginal cost in supply.

A

Willingness to supply each additional good.

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19
Q

What is the opportunity cost in the context of the PPF?

A

The cost of the next best alternative foregone.

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20
Q

What is absolute advantage?

A

The ability to produce more of a good with the same resources.

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21
Q

What factors influence market structures?

A

Number of firms, type of products, and barriers to entry.

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22
Q

What is the relationship between elasticity and substitutes?

A

Goods with more substitutes have higher price elasticity of demand.

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23
Q

What are inferior goods?

A

Goods for which demand decreases as income increases.

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24
Q

What is the significance of a comparative advantage in trade?

A

It allows countries to specialize and benefit from trade.

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25
Define marginal cost in production.
The additional cost incurred from producing one more unit of a good.
26
What is the Coase Theorem?
Externalities can be resolved through costless bargaining with clear property rights.
27
How does behavioral economics differ from traditional economics?
It studies decision-making with bounded rationality, biases, and heuristics.
28
What causes underproduction of public goods?
Free-rider problem and non-excludability.
29
What is the 90-10 ratio in inequality?
A measure comparing income at the 90th percentile to the 10th percentile.
30
What characterizes monopolistic competition?
Many firms offering slightly differentiated products.
31
What does marginal benefit in demand represent?
Willingness to pay for each additional good.
32
What is the formula for elasticity?
Elasticity = (% change in quantity) / (% change in price).
33
What are cartels?
Groups of firms that collude to control prices or output, acting like a monopoly.
34
What is income elasticity of demand?
The responsiveness of demand to changes in income.
35
What is the Law of Supply?
As price increases, quantity supplied increases, all else being equal.
36
What is perfect price discrimination?
Charging each consumer their maximum willingness to pay.
37
What impacts supply and demand curves?
External factors like policy, weather, or technology.
38
What causes surplus and shortage?
Surplus occurs when supply exceeds demand; shortage occurs when demand exceeds supply.
39
What is marginal benefit?
The additional benefit received from consuming one more unit of a good.
40
What factors can shift the demand curve?
Income, preferences, prices of related goods, expectations, type and number of buyers.
41
What is the opportunity cost of producing a good?
The value of the next best alternative foregone.
42
How do congestion and network effects impact demand?
They alter the value of goods based on user density and connectivity.
43
What is the hurdle method in pricing?
Offering discounts to consumers who overcome a hurdle, like using coupons.
44
How do segmented markets function?
Different prices are charged in separate markets based on demand elasticity.
45
How do taxes address negative externalities?
By internalizing the externality and aligning social and private costs.
46
What factors influence economic decisions?
Individual preferences, market conditions, and available resources.
47
What is a coordination game in game theory?
A game where players benefit from choosing the same strategies.
48
What is the role of zoning restrictions in housing markets?
They limit supply by restricting construction, impacting prices.
49
How does a market clear?
Through price adjustments that bring demand and supply into balance.
50
What is allocative efficiency?
Distributing goods to consumers who value them most highly.
51
Define cross-price elasticity.
The responsiveness of demand for one good to changes in the price of another good.
52
How does time horizon affect elasticity?
Demand is more elastic in the long term due to alternative options.
53
What leads to deadweight loss (DWL)?
Market inefficiencies such as taxes, subsidies, or externalities.
54
What is economic surplus?
The total benefits to consumers and producers from participating in a market.
55
What is price discrimination?
Charging different prices to different consumers for the same good.
56
What are redistributive taxes?
Taxes aimed at redistributing wealth to reduce inequality.
57
Define productive efficiency.
Producing a given output at the lowest possible cost.
58
What is the relationship between price and quantity demanded?
Inversely related; as price increases, quantity demanded decreases.
59
What are coordination problems?
Situations where players struggle to choose compatible strategies in the absence of communication.
60
How do you calculate price elasticity using the midpoint formula?
Percentage change in quantity divided by percentage change in price.
61
What is the free-rider problem?
When individuals benefit from a public good without contributing to its cost.
62
What is the cost-benefit principle?
Making decisions by comparing additional benefits to additional costs.
63
How does underproduction occur?
When the quantity produced is less than the socially optimal level.
64
Define progressive tax.
A tax system where the tax rate increases as income increases.
65
What is comparative advantage?
The ability to produce a good at a lower opportunity cost.
66
What is market equilibrium?
The point where quantity demanded equals quantity supplied.
67
What is equilibrium (EQM) in a market?
A state where quantity demanded equals quantity supplied (QD = QS).
68
What is diminishing marginal utility?
The principle that each additional unit of consumption adds less to overall happiness.
69
What impacts equilibrium price and quantity?
Changes in supply or demand, shortages, or surpluses.
70
What does the Law of Demand state?
As price decreases, quantity demanded increases, all else being equal.
71
Define public goods.
Non-rivalrous and non-excludable goods.
72
What impacts economic efficiency?
Factors like market power, externalities, and government policies.
73
How does consumer choice affect demand?
It reflects preferences and budget constraints impacting purchasing decisions.
74
What are externalities?
Costs or benefits not reflected in market prices.
75
What is price elasticity of demand?
The responsiveness of quantity demanded to changes in price.
76
What are complements in production?
Goods that are jointly produced, such as beef and leather.
77
What is a nonrival good?
A good whose consumption by one person does not reduce availability to others.
78
What is a competitive market?
A market where many buyers and sellers interact, and no single participant can influence the price.
79
What determines equilibrium price and quantity?
The intersection of demand and supply curves.
80
What is the difference between elastic and inelastic demand?
Elastic demand is sensitive to price changes; inelastic demand is not.
81
How does a reduction in price impact total revenue?
Depends on elasticity; revenue increases with elastic demand, decreases with inelastic demand.
82
Define normal and inferior goods in economics.
Normal goods have demand that increases with income, while demand for inferior goods decreases with income.
83
What is diversification?
Reducing risk by spreading investments across multiple assets.
84
Define risk aversion.
A preference for certain outcomes over uncertain ones with the same expected value.
85
What is a monopoly?
A market structure with one firm, unique products, and high barriers to entry.
86
Define marginal social cost.
The total cost to society of producing an additional unit of a good, including externalities.
87
What is the 'tragedy of the commons'?
Overuse of a common resource due to lack of property rights.
88
What is total revenue?
Price multiplied by quantity sold.
89
What are examples of price discrimination?
Airline pricing, student discounts, and country-specific pricing.

Econ (5 decks)

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