Ch.1/4 Ten Principles of Micro and The Market Forces of Supply and Demand
What is the primary determinant of value?
Scarcity
What is a price floor?
Legal minimum on price for good or service
What is the consumer surplus formula?
WTP - P
How do you determine the effects of free trade?
Compare domestic price before trade with world price
What is the approximate M2 supply of the US?
22T
Government printing too much money
What is tax incidence?
Manner in which burden is shared
What is the producer surplus formula?
P - cost
If a country has a low domestic price, are they an importer or exporter?
exporter -- have comparative advantage
How much gold is in Fort Knox?
What does a countries standard of living depend on?
Productivity
When is a price ceiling binding?
When it is below the equilibrium
What does DWL represent?
Fall in total surplus as a result of a tax
What system yields many benefits including: greater product variety, market competition, innovation, and access to technology?
International trade
Who coined the term "invisible hand"?
Adam Smith
What is the law of demand?
As the price of a good falls, the quantity demanded rises
What is the midpoint formula?
((end-start)/midpoint) x 100
What letter(s) represent DWL?
T + W
If a country is an importer and trade is allowed, who is better off producers or consumers?
Consumers -- paying less then if purchased from their own country
How much is the US trade deficit?
1.3T
Is the law of supply upward or downward sloping?
Upward -- because as price rises, quantity supplied rises
If there is an elastic supply and inelastic demand for a good, who bears the most tax burden?
buyers -- less elastic means more burden
As a tax grows, what happens to the tax revenue
If a countries domestic price is lower than the world price, what happens to total surplus?
rises --- gains exceed losses for both
Who is effected most by inflation?