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5 Cards in this Set
- Front
- Back
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Demand curve for inelastic/elastic
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very steep demand curve=inelastic
Very flat demand curve= elastic |
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Effects of subsidies
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Decrease the equilibrium price, increase the equilibrium quantity, and may decrease the efficiency of a market
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Real GDP doesn't consider
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Prices
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If preferences for a good change, will the market adjustments increase or decrease allocative efficiency?
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If our preferences for a good increase (for ex.), then allocative efficiency will be enhanced if we increase our consumption of the good. That is, we can be better off, given that we now prefer the good over others that we are currently consuming. As a result, demand will increase and will cause mrkets to produce more of tha good and less of other goods
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If costs of producing another good increase, will the market adjustments increase or decrease allocative efficiency?
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If costs of producing another good increase
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