Supply and Demand Flashcards
(5 cards)
1
Q
Describe income effect
A
As prices rise, peoples’ money income falls and they can buy less g + S
2
Q
Describe substitution effect
A
As price of a good rises, other goofs become relatively cheaper and thus consumers subsitute for them
3
Q
What is pareto efficiency
A
It is not possible to make someone better off without making someone worse off
4
Q
What did Amartya Sen say about pareto efficient outcomes
A
They are not necessarily fair
5
Q
How is Rent control pareto inefficient
A
Some potential tenants are rationed out of the market and there is excess demand
