Microeconomics
The enjoyment or satisfaction people receive from consuming goods and services
Utility
States that all else equal, the quantity demanded of a good falls as price rises.
Law of Demand
Wrote The Wealth of Nations; is considered the "Father of Economics"
Adam Smith
Development Economics
The paradox that countries with an abundance of natural resources, tend to have less economic growth, less democracy, and worse development outcomes than countries with fewer natural resources.
Resource Curse
(Dutch Disease also acceptable)
A _______ of all prices has the same effect on the budget line as reducing income by half.
doubling
A situation in which firms obtain cost advantages due to the amount of output produced, with average cost per unit of output decreasing with a firm's increasing size.
Economies of Scale
A popularly-used index which uses international prices of a particular fast food product as an informal way of measuring the purchasing power parity between two currencies.
Big Mac Index
British economist who fundamentally changed the study and practice of macroeconomics with his General Theory of Employment Interest and Money, published in 1936.
John Maynard Keynes
Health Economics
A model that derives demand for health. Treats health as a consumption good, input in production, and capital stock.
Grossman Model
The expression
limh--> 0 ( f(x+h) - F(x) )/h
is the definition of a _____.
Derivative
A measure of how sensitive demand is to changes in price.
Elasticity
The market value of all final goods and services produced within a country in a given period of time.
Gross Domestic Product (GDP)
Influential economist well-known for his work on consumption analysis, monetary history and stabilization policy. One of the twentieth century's most prominent advocates of free markets.
Milton Friedman
Econometrics
A statistical measure of the variance in the dependent variable that is explained by a model.
R2
If marginal cost rises when output is increased, the average cost of production ____.
falls
An index of income inequality ranging between 0 (for perfect equality) and 1 (for absolute inequality);
Gini Coefficient
(Lorenz Curve also acceptable)
An economic model that attempts to explain long-run economic growth by looking at capital accumulation, labor or population growth, and increases in productivity.
Solow Growth Model
American mathematician who made fundamental contributions to game theory, differential geometry, and the study of partial differential equations. In economics, he has provided substantial insight into the factors that govern chance and decision-making.
John Forbes Nash
Game Theory
If each player has chosen a strategy, and no player can benefit by changing strategies while the other players keep theirs unchanged, then the current set of strategy choices and their corresponding payoffs constitute a ________.
Nash Equilibrium
An environmental policy that results in all cars getting 50 MPG will be more effective at reducing the consumption of gasoline if the demand for miles driven is ____.
elastic
The three assumptions that can be made about rational consumer preferences.
Must answer all three correctly.
Complete information, transitive, non-satiation (more is better)
DOUBLE JEOPARDY - MUST ANSWER ALL 3 CORRECTLY
The "impossible trinity" of international finance refers to the fact that a nation cannot simultaneously have ___, ____, and ____.
Free capital flows, a fixed exchange rate, independent monetary policy
Italian economist who made important contributions to the study of income distribution and individuals' choices. Posited a condition in which economic actions helped at least one entity while harming no others.
Vilfredo Pareto
Industrial Organization
What is the equilibrium price if two firms compete in prices, where Firm 1 has a marginal cost C1, Firm 2 has a marginal cost C2, and C1>C2?
Gladys spends her entire income on bread and cheese. Her demand for bread is elastic. If the price of bread increases, ceteris paribus, what happens to the amount of cheese that she buys?
Increases