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14 Cards in this Set
- Front
- Back
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elasticity
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measures the responsiveness of one variable to a change in another
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perfectly elastic
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elassticity of infinity, demand or supply would be drawn as a horizontal line
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perfectly inelastic
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elasticity of zero - demand or supply would be drawn as a vertical line
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utility
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satisfaction recieved from consumption of a good
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utils
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unit of measurement of utility
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total utility
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as Qd goes up, TU goes down
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marginal utility
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willingness to pay
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Law of Diminishing Marginal Utility
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Qd goes up while marginal utility goes down
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consumer surplus
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the difference between total amount you're willing to pay and the total paid for a given quantity
CS= willing to pay - actually paid |
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economies of scale/ increasing returns to scale
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when increasing all inputs causes a more-than-proportional increase in output. associated with declining long-run average cost
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diseconomies of scale/ decreasing returns to scale
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when increasing all inputs leads to a less than proportional increase in output. associated with increasing long-run avg. cost
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price elasticity of demand
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measures the BUYERS relative responsiveness of a price change
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opportunity cost of capital
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the rate of return from the next best investment (money you could have made in a different industry)
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excise tax
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per unit tax (every time you sell a good you pay $$)
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