Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
28 Cards in this Set
- Front
- Back
Tradeoff
|
Exchange for another good
|
|
Opportunity cost
|
Best thing you must give up to get something else
|
|
PPF
|
Shows limits to production with available resources
|
|
Slope of PPF
|
Gets steeper when opportunity cost increases
|
|
Demand
|
Price up = demand down
Price down = demand up |
|
TUV
|
Max amount of goods one is willing to pay for
|
|
AUV
|
TUV/Q
|
|
MUV
|
Max Amount willing to pay for an extra unit
|
|
Diminishing marginal use value
|
The larger the TUV the lower the Marginal Value
|
|
Compliment
|
Goods consumed together
|
|
Demand curve movement
|
P up D down - movement up curve
P down D up - movement down curve D up - shift curve right D down - shift curve left |
|
Law of supply
|
P up Supply up
P down Supply down |
|
Market supply
|
Sum of all sellers in market
|
|
Individual demand
|
Demand of one person or group
|
|
Market equilibrium
|
QD = QS
|
|
Normal good
|
Demand up if Income is up
Demand down if Income is down |
|
Inferior good
|
Demand down if income goes up
Demand up if income decrease |
|
% change in price
|
(New price - Initial price)
___________________________ x 100 Initial price |
|
Elastic
|
% quantity is greater than % price
|
|
Inelastic
|
% Quantity is less than % Price
|
|
% change in QD
|
Q2-Q1
---------- (Q1+Q2)/2 |
|
Revenue rule
|
If revenue decreases demand is elastic
If revenue increases demand is inelastic |
|
Price elasticity of demand
|
% CQD / % CP
Greater than 1 elastic Less than 1 inelastic |
|
Price elasticity of supply
|
% CQS / %CP
If greater than 1 elastic If less than 1 inelastic |
|
Cross elasticity of demand
|
Response to change in price in compliment or substitute
% CQD ------------ % P in C or S |
|
Compliments in elasticity
|
Compliments change in opposite directions and are negative
|
|
Substitutes in elasticity
|
Change in same direction and positive
|
|
Straight line demand curve
|
Midpoint is unit elastic
Top point is elastic Bottom is inelastic |