Jamie Gazzola Is A ******* Retard

Front 1

What is economics?

Back 1

The necessity to chose how to allocate scare resources to fit unlimited needs

Front 2

What are the types of economies

Back 2

Traditional, command, free-market, mixed

Front 3

What role to governments play in modern mixed economies

Back 3

Private property, freedom of contract and redistribution of income

Front 4

PeD formula

Back 4

% change in Qd / % change in price

Front 5

When is demand inelastic

Back 5

E<1

Front 6

When is demand elastic

Back 6

E>1

Front 7

Where is demand most elastic

Back 7

Long run

Front 8

How does total expenditure correlate with PeD

Back 8

If e<1 te is + related with p. If e>1 te is - related with p. If e=1 te is constant

Front 9

PeS formula

Back 9

% change in Qs / % change in price

Front 10

Where is supply more elastic

Back 10

Long run, because it takes time for producers to adjust output in response to price changes

Front 11

How to determine who takes the burden of excise tax

Back 11

Relative elasticities

Front 12

What is income elasticity of demand?

Back 12

How quantity demanded changes when income changes

Front 13

Income elasticity of demand formula

Back 13

% change in Qd / % change in income

Front 14

What is normal goods income elasticity

Back 14

Positive

Front 15

What is inferior goods income elasticity

Back 15

Negative

Front 16

What is cross elasticity of demand

Back 16

Demand for one product as price of another product changes

Front 17

Cross elasticity of demand formula

Back 17

% change in Qd of good x / % change in price of good y

Front 18

What does cross elasticity of demand define

Back 18

Substitutes (when +) and complements (when -)

Front 19

What are government price controls

Back 19

Attempt to hold price at disequilibrium

Front 20

Price floor

Back 20

Above Pe, leads to excess supply

Front 21

Price ceiling

Back 21

Below Pe. Leads to excess demand and black marketeers

Front 22

Rent controls

Back 22

Price ceilings that lead to shortage of rentals and allocation by sellers preference. Shortage is worsened over time

Front 23

When is market surplus maximized

Back 23

At equilibrium (it is efficient)

Front 24

Government intervention often leads to

Back 24

Reduction in total economic surplus

Front 25

Why are demand curves negatively sloped

Back 25

To restore the ratio of marginal utility to price

Front 26

Substitution effect of price changes

Back 26

Increase in purchases of product with new lower price

Front 27

Income effect of price changes

Back 27

Decrease in price leads to increase of real income thus increase in purchase of normal goods

Front 28

Consumer surplus

Back 28

Consumer values good higher than price

Front 29

Paradox of value

Back 29

Utility vs command price (diamonds v water)

Front 30

Types of firms

Back 30

Single proprietorship, ordinary partnership, limited partnership, corporations

Front 31

How do firms finance themselves

Back 31

Selling shares, using retained earnings, borrowing from lenders

Front 32

Accounting profit

Back 32

Revenue - explicit costs (labour, capital, intermediate inputs, depreciation)

Front 33

A firms profits

Back 33

Total revenue - total costs

Front 34

What is a firms goal

Back 34

Maximize profit

Front 35

Economic profit

Back 35

Revenue - total costs, explicit and implicit (opportunity cost)

Front 36

What attracts resources to an industry

Back 36

Positive economic profits

Front 37

What detracts resources from an industry

Back 37

Negative economic profits

Front 38

Law of diminishing returns in short run

Back 38

Mc and ac eventually rise as outputs rise

Front 39

Why are SRAC u shaped

Back 39

Average product increases at low levels of output but eventually declines sufficiently to offset advantages of spreading overhead

Front 40

Mc and mp is sr

Back 40

Mc is downward when mp is raising and vice versa

Front 41

Where is a plants capacity

Back 41

Output that corresponds to the minimum point of a SRATC

Front 42

Cost minimization formula for long run

Back 42

(MPk/MPl) = (Pk/Pl)

Front 43

LRAC and SRATC relation

Back 43

Each SRATC reps capacity at a specific plant size (optimal output)

Front 44

Effect of technological improvements

Back 44

Downward shift of LRAC curve, they are endogenous responses.

Front 45

Types of technological change

Back 45

New production techniques, improved inputs and new products

Front 46

Theory of perfect competition

Back 46

1. All firms produce homogeneous product

2. Consumers know nature of product and it’s price

3. Each firms min efficient scale is at a level relatively small to industry’s total output

4. Industry displays freedom of entry and exit

Front 47

Demand and price in perfect competition

Back 47

Price takers with horizontal demand curve for each firm, downward for the industry

Front 48

Level of output in perfect competition

Back 48

If profit maximizing, P >= AVC

MC = MR

MR = P

MC = market price

Front 49

Perfect competition in the short run

Back 49

Supply curve = MC curve above the min average variable cost

Each firm is maximizing profits but may be making losses or breaking even

Front 50

Perfect competition in the long run

Back 50

Profits and losses lead to entry and exit

Pushes to long run zero profit equilibrium and moved production to min AVC

Older plants are discarded and replaced when P is below AVC

Long run response of declining industry is to continue to satisfy demand by employing existing plants until P>SRAVC

Front 51

What is monopoly

Back 51

Entire industry supplied by one firm

Front 52

Monopolists market demand curve

Back 52

Market demand curve is a monopolists average revenue curve which lies below its demand curve

Front 53

When is a monopolist maximizing profits

Back 53

MR = MC

Front 54

Where does a monopolist produce to

Back 54

P > MC

Front 55

What is the inefficiency of a monopoly

Back 55

By restricting output below competitive level they impose a DWSL

Front 56

Monopolists profits in the short run

Back 56

+,-,0

Front 57

Monopolies in the long run

Back 57

There must be effective barriers to entry, it is very difficult to maintain these in the very long run

Front 58

Cartel

Back 58

A group of firms agreeing to restrict joint output to the monopoly level. Total profits at this level exceed those in a competitive equilibrium. They are unstable due to strong incentive to cheat

Front 59

Price discrimination

Back 59

A firm that discriminates between different market segments will equate MC and ME in each market. The market with less elastic demand will have the higher price. If price discrimination leads the firm to increase outputs, market efficiency is improved.