Test 1 Flashcards
(6 cards)
1
Q
What are the four principles of economics according to Stevenson?
A
- Cost-benefit principle
- Opportunity cost principle
- Marginal principle
- Interdependence principle
2
Q
What is the difference between normative and positive statements?
A
Positive = factual statements Normative = subject to opinion or belief
3
Q
Equation for Price Elasticity?
A
[(Q1 - Q0) / (Q1 + Q0)] / [(P1 - P0) / (P1 + P0)]
4
Q
If a price ceiling is too high, what happens?
A
Surplus of supply
5
Q
If a price ceiling is too low, what happens?
A
Shortage of supply.
6
Q
What is opportunity cost?
A
Loss of potential gain from missing out on something. Can be numerical or just experiences
