Econ Midterm 1

Front 1

model

Back 1

what economistsw approach economic problems with - simplification of a complex reality that incorperates assumptions

Front 2

policy in econ

Back 2

emphasizes what's best for the economy but is completely subjective

Front 3

things that effect demand

Back 3

price
income
price of related goods
taste and preferences
number of buyers
expectations

Front 4

other things being equal

Back 4

sets assumption that other variables reamin constant

Front 5

market

Back 5

a group of buyers and sellers of a particular good or service

Front 6

competitve market

Back 6

a market in whihc ther are many buyers and many sellers so that each has a negligible impact on the market price

Front 7

quantity demanded

Back 7

amount of a good that buyers are willing and able to purchase

Front 8

law of demand

Back 8

the claim that, other things equal, the quantity demanded of a good falls when the price of the good rises

Front 9

demand schedule

Back 9

a table that shows the relationship between the price of a good and the quantity dmeanded

Front 10

demand curve

Back 10

a graph of the rleationship between the price of a good and the quanitty demanded

Front 11

normal good

Back 11

a good for which other things equal, an increase in income leads to an increase in demand

Front 12

inferior good

Back 12

a good for which other things equal, an increae in income leads to a decrease in demadn

Front 13

substitutes

Back 13

two goods for which an increase in the price leads to an increase in the dmeand for the other

Front 14

complements

Back 14

two goods for which an increase in the price of one leads to a decrease in demand for the other

Front 15

quantity demanded is aways accompanied by

Back 15

a price and a market description

Front 16

higher PEd

Back 16

more sensative ppl are

Front 17

If abs value of PED > than 1 it is a

Back 17

elastic

Front 18

if abs value of PED < 1

Back 18

it is inelastic

Front 19

if demand is elastic

Back 19

then price is not maximized

Front 20

total revenue =

Back 20

P x Qd

Front 21

total revenue is maximized if

Back 21

abs val PED = 1 at prevailing price

Front 22

factors effecting PED

Back 22

1. availabilty of close subs
2. nessecities vs luxaries
3. def of market (broad vs narrow)
4. amount of time

Front 23

IED

Back 23

%change Qd/%chg I

Front 24

supply shifters

Back 24

1. input prices
2. technology
3. expectations
4. number of sellers increases
5. acts of nature

Front 25

PES is ______ to slope

Back 25

equal, and is the same on the supply curve

Front 26

deadweight loss

Back 26

loss in total surplus casued by some market distortion - by not being in equilipribum
TSp*q* - TSpq

Front 27

outcome

Back 27

a price quantity pari where the Q is the one bought/sold in market for that price

Front 28

the price consumpers pay (Pct)

Back 28

is equal to Pst +T

Front 29

consumer tax burden

Back 29

amount of money consumers pay for the tax

Front 30

consumer burden =

Back 30

(Pct - P*) (Qt)

Front 31

producer burden =

Back 31

(P*-Pst) (Qt)

Front 32

when producer burden is greater than consumer burden

Back 32

supply is more inelastic and producers suffer more

Front 33

subsidy

Back 33

a payment by the government or every unti bought and sold

Front 34

Pcs +S

Back 34

Pss

Front 35

M or income is = to

Back 35

Px(x) + Py(y)

Front 36

completeness

Back 36

ppl know exaclty what they like of evrything - indifference curve goes through all poitns

Front 37

assumption 1

Back 37

more is better - monotinicity

Front 38

assumption2

Back 38

ppl prefer combos of goods rather tahn extreme bundles (convexity)

Front 39

4 rules for IC

Back 39

1. higher IC's better tahn low ones
2. IC cant be upward sloping (A1) , downward shows tradeoffs,less of one and more of another
3. IC cannot cross bc prefferences aren't transititve
4. IC bowed inward (a2) - have to give up alot not a little, combes better than extremes

Front 40

MRSx,y

Back 40

marginal rate of sub of good x for good y

Front 41

utility

Back 41

measure of relative satisfaction from consumption of a good

Front 42

we assume that each person has ________function and _________ change

Back 42

1
does not

Front 43

marginal utility of good x

Back 43

is the change in utility if I increaes my consumpiton of good x by 1 unit

Front 44

MRS =

Back 44

MUx/MUy

Front 45

MUx is

Back 45

change in happines for one unit of good x

Front 46

abs value of slope IC = _______ at optimum

Back 46

abs value of slope of bc

Front 47

budget constraint equ

Back 47

Px(x) + Py(y) <= M

Front 48

BL

Back 48

Px(x) + Py(y) = M

Front 49

PES magic number is

Back 49

1

Front 50

CPED magic number is

Back 50

0