Chap 1
What is the term for what you gained from taking Prof. S vs. an on-line version of this course?
UTILITY
These are the two main groups that interact in the basic circular flow model.
What are households and businesses?
What change results in a slide from one point to another along a fixed demand curve?
Change in quantity demanded
These cost or benefits can either be positive or negative.
What are Externalities?
This economic law states that, all things equal, an increase in the price of a good will increase the quantity supplied.
What is the Law of Supply?
What is the law of increasing opportunity costs?
The principle that as the production of a good increases, the opportunity cost of producing an additional unit rises.
Households provide these to the resource market.
What are land, labor, capital, and entrepreneurship?
Thi sis a measure the individual units of satisfaction
What are UTILS?
This economic issue occurs after a transaction when one party changes their behavior because they are insulated from risk, like someone taking more driving risks after buying car insurance.
What is a moral hazard?
When consumer income rises, this concept determines whether a good is considered normal or inferior.
What is income elasticity of demand?
What is the economic problem of having limited resources to satisfy the unlimited wants/needs of humans known as?
Scarcity
This market is where goods and services are bought and sold.
What is the product market?
This is the area above the price and below the demand curve, representing the extra benefit buyers receive.
What is consumer surplus?
This type of externality occurs when a third party benefits from a market transaction, they are not directly involved in.
What is a positive externality?
This type of elasticity measures how the quantity demanded of one good responds to a price change in another good
What is cross-price elasticity of demand?
BONUS: What does the value tell you?
_____ is decisions made by individual customers, workers, households, and firms. While_____ focuses on the performance and behavior of the economy as a whole
What are Microeconomics, Macroeconomics (Respectively)
This is what businesses pay households for their resources.
What is income or wages
What kind of relationship does the Law Supply have?
What is a Positive or Direct Relationship
What is it called when one party in a transaction has more information about a product than the other party?
Asymmetric Information
This happens to total revenue when a company raises prices and demand is elastic.
What is total revenue goes down?
When an economist sticks to facts like "higher gas prices reduce driving" instead of saying "gas should be cheaper because that's unfair," they're making what kind of statement?
Normative Statement.
When added to the circular flow, this sector collects taxes and injects spending into the economy.
What is the government?
This happens to equilibrium price and quantity when demand increases and supply decreases simultaneously.
What is price increases, and quantity change is indeterminate?
This type of government intervention can correct a negative externality by aligning private costs with social costs. (Hint - funny sounding name)
What is a Pigovian tax?
If a 10% drop in price leads to a 2% increase in quantity demanded, demand is described this way.
What is inelastic?