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Flashcards in Test 3 Deck (69):
1

competitive market

buyers and sellers are price takers and firms can freely enter/exit
AR=P =MR

2

average revenue

AR=TR/Q

3

marginal revenue

MR=dTR/dQ change in revenue with new unit

4

shutdown

short run
firm still pays fixed cost
do if TR

5

exit

long run
no costs
TR

6

sunk cost

already spent, cant get back
ignore in decions
short run fixed costs are sunk

7

microeconomics

study of how households and firms make decisions and interact in markets

8

macroeconomics

study of economy wide phenomana including inflation, unemployment and economic growth

9

gross domestic product

total income of everyone and total expenditure
income is supposed to equal expenditure

10

consumption

spending by households on goods and services but NOT purchases of new housing

11

investment

purchase of capital goods

12

government purchases

Gov consumption and investment but not transfer payments

13

net exports

NX=exports-imports
exports - spending on domestically produced goods by foreigners
imports - spending on foreign goods by domestic residents

14

nominal GDP

production of goods and services at valued at current price

15

real GDP

productino of goods and services at constant price of a base year not effected by price change

16

GDP Deflator

measures curent level of prices relative ot the level of prices in the base year to take inflation out of nominal GDP

17

inflation

economy overall price level is rising

18

inflation rate

percentage change in some measure of the price level from one period to the next
equation slide 21

19

labor force

total number or workers, employed and unemployted

20

unemployment rate

percentage of labor force unemployed so (number of employed/labor force)*100

21

labor-force participation rate

percentage of total adult population that is in the labor force, the fraction of the population that has chosen to be in labor market
(labor force/adult population)*100

22

natural rate of unemployment

4.9%+or- unemployment fluctuates around this

23

cyclical unemployment

deviation of unemployment from its natural rate

24

discouraged workers

individuals who would like ot work but have given up looking for a job

25

frictional umemployment

it takes time for workers to search for the jobs that best suit their tastes and skills and explains short spans of unemployment

26

structural unemployment

not enough jobs for everyone who wants one
explains longer unemp
result of wages set above equilibrium

27

job search

Process by wihhc workers find appropriate jobs given their tastes and skills

28

unemployment insurance

Gov program, partially protects workers income but increases frictional unemployment
for laid off people

29

union

worker association that bargains with employers to get treated better

30

collective bargaining

process by which unions and firms agree to terms of employment

31

strike

organized withdrawal of labor froma firm by a unon

32

efficiency wages

above equilibrium wages paid by firms to increase worker prodcutivitiy

33

what is the goal of every frim

to maximize profit

34

how are profits calculated

TR-TC = (P-ATC)*q for positive
negative: TC-TR= (ATC-P)*Q

35

relationship of AR, MR, and Price in competitve firms

P=AR=MR in competitive firms

36

Mr and MC to production and profit

MR>MC increase prod
MR

37

what is meant by the shutdown point, where is it

@ P=AVC so shutdwon at or below

38

unerstand relationship of MC and supply curve

same thing in short run above AVC

39

diff btwn short and long run behaviour when shutdwon enter or exit

short run: shutdown if TRTC or P>ATC

40

profits possible? short and long run

only in short run, no economic profit in long run because firms keep entering until price equals minimum ATC

41

Definition of GDP

market prices to reflect value of goods
all items produces and legal in economy, not produced and consumed at home
not intermediate goods
currently produced domestically

42

whhc goods/services not in GDP

items produced and sold illicitly as well as those produced and consumed at home

43

how are intermediate goods counted

they are not included separatley but rather in the price of the final goods

44

componentes of GDP (C+I+G+NX)

consumption
investment
gov purchases
net exports

45

real vs nominal GDP

nominal is valued at current price
real is at constant price from base year
nominal=real for base year

46

how is GDP deflator calculated

(nominal/real)*100

47

how does GDP deflator measure inflation rate

Inflation in year 2 = ((GDP deflator in year 2−GDP deflator in year 1) /(GDP deflator in year 1)) ×100)

48

why GDP not perfect

does not include leisure, value of activity outside markets, or quality of environment
nothing about distribution of income

49

employed vs unemployed vs not in labor force

working vs looking for work vs not even looking for work

50

unemployment rate calculation

(number of unemployed/labor force)*100

51

men v women participation rates

women have lower rates of labor force particpation but have similar unemployment rates

52

black v white participation rates

blacks have similar labor force participation but higher unemployment

53

adults v teens participation rates

teens have lower rates of labor force participation and higher unemployment

54

unemployment rate imperfect?

does not measure quality of job or movement in and out of labor force or discouraged workers

55

why structural unemployment?

wages are too high cause this such as minimum wage laws, unions, and efficiency wages

56

gov programs to facilitate job search

gov run employment agencies or public training programs

57

employees union now vs 40s

only 11% of workers now, used to be 33%
now pretty tame but was like a cartel before

58

union worker pay v non union wokrer pay

union workers earn 10-20% more

59

arguments against unions

like a cartel
inefficient because highh wages reduce employment in unionezed firms bbelow efficient leveel
inequitable - some workers benefit at expense of others

60

impacts of efficiency wages

improves worker health
reduces worker turnover
improves worker qualityand effort

61

Fed reserve chairmen

Jerome powell

62

total nonfarm employ increase FEB 18

313,000

63

unemployment rate feb 18

4.1%

64

labor force participation rate feb 18

63.0%

65

US tariff rates on steel and aluminum

25% on steel and 10% on aluminum

66

Fed interest rate meeting change and target inflatino

raised interest rate to between 1.5-1.75% for target inflation of ???

67

population increase 16-17

no idea???

68

home prices in crease Jan 18

6.2%

69

US GDP increase 4th quarter 2017

2.9%