Shifters
The price of tea (a substitute to coffee) rises.
What is an increase in the demand for coffee?
The study of how individual economic actors make decisions and allocate resources in the face of scarcity.
What is microeconomics?
A simplified representation of reality.
What is a model?
No extra cost when exchanging a good or service.
What is no transaction costs?
A cost or benefit that affects a third party not involved in a transaction.
What is an externality?
The price of steel (an input to cars) rises.
What is a decrease in supply of cars?
Camille
What is Dr. Nelsons first name?
Needed to use models.
What are assumptions?
Equilibrium price if both supply and demand increase.
What is indeterminate?
Pollution
What is a negative externality example?
Demand for clothes go up because consumers can afford to buy more.
What is an increase in consumer income?
Something I give up to do another thing.
What is opportunity cost?
Model that shows trade-off between production decisions.
What is the production possibilities frontier (PPF)?
Point at which the marginal cost of production is equal to the marginal benefit obtained from consuming an item.
What is the efficient market equilibrium?
Education.
What is an example of a positive externality?
Tesla expects a full ban on gas-powered vehicles in California.
What is a decrease in the supply of Teslas?
Goods and services used for production.
What are inputs?
What is the supply and demand model?
Many buyers and sellers, identical products, free market entry and exit.
What is a competitive market?
A tax imposed to counteract a negative externality.
What is a Pigouvian tax?
Alice sells clothes. Currently, she produces scarves for senior homes nationwide, and also prison jumpsuits for the Federal Bureau of Prisons. The FBI then decides to crack down on organized crime. What happens to the supply of scarves?
What is a decrease in the supply of scarfs?
All else equal, All else held constant, Everything the same.
What is ceteris paribus?
Model that shows the relationship between price and quantity demanded.
What is the demand curve?
Price takers.
What are buyers and sellers in a market?
A private bargaining solution will work if there are private property rights and no transaction costs.
What is Coase theorem?