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31 Cards in this Set
- Front
- Back
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What is elasticity?
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how much the demand/supply changes with a change in the price
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what is an inelastic product
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when the change in price doesn't effect the demand/supply
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What are some examples of elastic products. What makes a product elastic?
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luxuries such as vacations. These product take a short time to change, there are substitutes for the product, and the % of income spent on the product is low
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What are some examples of inelastic product, and what makes a product inelastic?
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items such as toilet paper and gasoline. These products take a long time to change, there are no substitutes, and the % of income spent on these products are high.
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If the market is narrow, will there be more or less substitutes for it?
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less substitutes for it
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Is a product elastic or inelastic if E>1
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elastic
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Is a product elastic or inelastic if E<1
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inelastic
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What is the formula for calculating the elasticity
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(amount of change in demand/original demand)/(amount of change in price / original price)
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Define diminishing marginal utility
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the more resources you devote to something the less marginal return you receive.
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What are some examples of capital goods
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fertilizer, tractor, cars, taxi
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What are some examples of consumption goods
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oranges, cars, veggies
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If a point lies inside a curve then
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anything inside of the curve is inefficient
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What is the only thing that can shift a curve to the right
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a shift due to technology advances
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What makes a point on the curve unattainable
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when the point lies outside of the curve
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What are the four factors of production
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1. land 2. labor 3. Capital (money equiptment) 4. Entrepreneurship (knowledge, vision)- risk taker that creates ideas, products and markets, that create jobs and wealth.
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What are the two types of markets
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Factor markets (real estate, labor market, physical capital) and product market
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What is a venture capitalist
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invest money in Entrepreneurs, which is a big risk
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What are negative externalities
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a situation when one benefits but many pay. Example include pollution and taxes on cigarettes
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What are positive externalities
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situation when one pays but many benefit. Example, donations, research and development( subject to diminishing returns at the company level but increasing returns at the society level) and a college education(society benefits)
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Give an couple examples of things that are subsidized
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education and research and development.
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What does diversification mean?
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putting your savings into several different areas.
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What are 2 examples of funds
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exchange trade and mutual funds
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What do index funds do
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invest in companies from all sectors of the economy
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What are the three keys to saving money
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1. start saving as soon as possible 2. get out of credit card debt and stay out of it 3. don't let money sit in the bank at 2-3%
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What is outsourcing
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U.S. firms producing goods overseas at cheaper labor rates.
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What are two protectionism measures
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the use of tariffs (taxes on imported goods) and quotas ( limits on the quantity of imported goods)
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What are the arguments for protectionism
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1. protect jobs 2. protect high wages 3. protect infant industries 4. national security
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what are the arguments against protectionism?
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1. loses jobs 2. prices are higher 3. infant industries become dependent on help
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What does comparative advantage mean
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the ability to produce something at a lower opportunity cost.
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what are the arguments against protectionism or for free trade
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1. gives product variety 2. economies of scale- bigger size of a company means that materiel cost can be ordered in bulk, lowering cost, which are passed on to consumers as cheaper prices.
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What are the winners and losers involved in a subsidy of U.S. farmers
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Winners: U.S. farmers, consumers worldwide. Losers: U.S. tax payers, international farmers
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