Elasticity
What does a perfectly inelastic graph look like?
A vertical line.
How does the demand curve slope on a graph? (Direction)
Downward.
What does macroeconomics focus on?
the economy of the nation as a whole.
What is the law of demand?
the negative relationship between a good’s price and the quantity demanded.
Who coined the term Pareto Efficiency?
What does a perfectly elastic graph look like?
a horizontal line.
How does the supply curve slope on a graph? (Direction)
Upwards.
What is normative economics?
The use of economic analysis to guide decisions about what SHOULD be as opposed to what IS the case.
What is the term used to describe goods where demand is positively related to income?
What happens when a service shifts from full-service to self-service?
Labor costs reduce and supply increases.
If the elasticity is UNIT elasticity, there will be a ____% change after a 1% change in price.
1%
What does a PPF show?
The opportunity costs of completing different actions over a period of time.
What is opportunity cost?
The value of the next best alternative (trade-off) to the choice you have made.
When a lower price for one good causes demand for another good to increase, it’s called a what?
a complement.
What are some examples of highly organized markets? (This was in the guide…)
The New York Stock Exchange and the Chicago Mercantile Exchange.
When the time horizon is longer, what is the elasticity like?
When a $0.10 tax is imposed on a $0.20 call/minute policy, what happens to the equilibrium?
The graph shifts to the left and the equilibrium decreases.
What kind of markets tend to gravitate toward the equilibrium quantity and price?
Competitive markets.
Someone who at a given price is INDIFFERENT between buying or not buying a good is called what?
A marginal buyer.
How many items does the average supermarket carry?
31,530.
When two curves pass through the same point, which is more elastic?
The flatter curve.
When discussing Robinson and Crusoe (coconut and fish graph), why does Robinson have the comparative advantage over coconuts?
Because he gives up less fish to produce them compared to Crusoe.
How is individual consumer surplus calculated?
the price an individual is willing to pay MINUS the amount they actually paid.
What happens when an input cost increases for a good ON A SUPPLY CURVE? (What happens to the graph?)