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40 Cards in this Set
- Front
- Back
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Fallacy of Composition
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Excessive generalization
(what is good for one is good for all) |
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Association of Causation
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Because of one thing, another thing happened
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Elasticity Formulas
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(P1+P2)/(Q1+Q2)...USE FOR POINTS
OR %Change in Q/%Change in P...IF YOU HAVE PERCENTS |
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Elastic Demand
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-infinity<E<-1
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Inelastic Demand
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-1<E<0
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Elastic Supply
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Must be positive
1<e<infinity |
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Inelastic Supply
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0<e<1
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What never effects demand?
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Own price of good
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Tastes
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if people like it, demand increases
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Expectations
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if i expect price to increase, i'm going to buy more today
if i expect price to decrease, i'm going to buy less today |
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Number of Buyers
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If number of buyers increase, demand goes up
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Price of other Products
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if price of a substitute product increases, demand for ours increases
if price of a complement product increases, demand for ours goes down |
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Income
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normal good: if our income increases, we buy more
inferior good: if our income increases, we buy less |
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Positive Statement
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Fact
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Normative Analysis/Statement
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Includes an opinion
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Price Ceiling below equilibrium
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Causes shortage
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Price Ceiling above equilibrium
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no effect
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Price floor below equilibrium
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no effect
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Price floor above equilibrium
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surplus
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Signs on Demand Function
Income Sign neg on z pos on a |
Inc: pos means normal, neg means inferior
means z and x are complements means a and x are substitutes |
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If government has a budget surplus
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Government revenue is greater than government spending
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If government has a budget deficit
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Government spending is greater than government revenue
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Sole Proprietorship
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Business owned by one person and the owner receives all profits and are responsible for all debts incurred
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Partnership
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Business owned by two or more people
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Corporation
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A legal entity owned by shareholders
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Multinational Business
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A firm that owns and operates producing units in foreign countries
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GDP (Income Method)
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GDP= Wages+Interest+Rent+Profit- Net Factor Income from Abroad+ Capital Consumption+ Indirect Business Taxes
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GDP (Expenditure Method)
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GDP= Consumption+Investment+Government Spending+ Net Exports (Exports- Imports)
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GDP Value
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Price times Quantity
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GDP w/ Base Year
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Use price of Base Year
If there's more than one product, add them |
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Current Account
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merchandise, services, investment incomes, and unilateral transfers
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Exports of goods
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Credit
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Import of goods
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Debit
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Balance of Payments
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must always be zero
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When are real GDP and nominal GDP the same?
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When the base year is used to calculate real GDP
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If the dollar goes down,
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we say it appreciated
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if the dollar appreciates
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the pound depreciates
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If a price on a bond decreases
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percentage return (interest rate) increases
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Unemployment Formula
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unemployment rate= unemployed ppl/ everyone in labor force
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GDP per Capita Formula
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GDP/Population
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