ECON 100 - Exam 1

flatter

a graph with a [flatter/steeper] curve is considered more elastic

consumer

if demand is more elastic then the [producer/consumer] will pay LESS taxes

producer

if supply is more elastic then the [producer/consumer] will pay LESS taxes

rival in consumption

if more people use a good, then it lowers the qualities or capabilities for other people using it

excludable

whether or not you can prevent people from using a good

private

type of good that’s excludable and rival in consumption

club

type of good that is excludable but doesn’t rival in consumption

common resource

type of good that is not excludable but does rival in consumption

common resource

type of good associated with negative externalities

public

type of good that is not excludable and does not rival in consumption

public

type of good associated with positive externalities

change in good A / change in good B

opportunity cost of good A = __

constant

a ppc with a straight line has a [constant/increasing/decreasing] opportunity cost

decreasing

a ppc with a line bowed inwards has a [constant/increasing/decreasing] opportunity cost

increasing

a ppc with a line bowed outwards has a [constant/increasing/decreasing] opportunity cost

inefficient

a point inside the ppc is considered _

efficient

a point on the ppc is considered _

unattainable

a point outside the ppc is considered _

MB - MC = 0

The ideal breaking point of spending money is calculated by this formula » marginal analysis

sunk cost

money that has already been spent on a project, but that you don’t include in the calculation for whether or not to spend more money on a project in marginal analysis

marginal revenue

the change in revenue with an additional worker is known as _

marginal cost

the cost to hire an additional worker

MR = MC

what two should be equal to each other when determining the number of workers to hire

lower

the party with the comparative advantage has a [lower/higher] opportunity cost

increase

an increase in supply OR demand will [increase/decrease] the equilibrium quantity

increase

increasing demand will [increase/decrease] the equilibrium price

decrease

increasing supply will [increase/decrease] equlibium price

demand

[demand or supply] - changes in consumer preferences

demand

[demand or supply] - the changes in price or quantity of a complementary good

demand

[demand or supply] - the changes in price or quantity of a supplementary good

demand

[demand or supply] - number of consumers

demand

[demand or supply] - consumer income

supply

[demand or supply] - change in taxes/tariffs

supply

[demand or supply] - change in subsidies

supply

[demand or supply] - number of firms/producers

supply

[demand or supply] - change in the cost of inputs and production

demand

[demand or supply] - customers expect prices to go up

supply

[demand or supply] - firms expect input prices to go down

supply

[demand or supply] - technological advancements

time input of A / time input of B

how to calculate opportunity cost of A with time input

amount of B able to produce / amount of A able to produce

how to calculate opportunity cost of A with number of goods for A and B

absolute

whoever can produce the most total volume of a good has the __ advantage

Q / P

elasticity is the absolute value of the percent change in [] over the percent change in [] with the midpoint method

elastic

when demand is [elastic/inelastic/unit], an increase in price means total revenue will decrease

inelastic

when demand is [elastic/inelastic/unit], an increase in price means total revenue will increase

unit

when demand is [elastic/inelastic/unit], an increase in price means total revenue will not change

elastic

the left most part of a straight line demand curve is considered [elastic/inelastic/unit]

inelastic

the right most part of a straight line demand curve is considered [elastic/inelastic/unit]

unit

the middle part of a straight line demand curve is considered [elastic/inelastic/unit]

max price consumer is willing to pay - the price they actually pay

how is consumer surplus calculated CONCEPTUALLY (not area)

revenue (price customer paid) - cost to produce

how is producer surplus calculated CONCEPTUALLY (not area)

greater

a shortage happens when the quantity demanded is [greater/less] than the quantity supplied

less

a surplus happens when the quantity demanded is [greater/less] than the quantity supplied

ceiling

a price [ceiling/floor] causes a shortage

floor

a price [ceiling/floor] causes a surplus

elastic

over time, supply and demand curves become more [elastic/inelastic]

unemployment

the gap between the amount of labor supplied and the amount of labor demanded created by a binding minimum wage represents _

above

a binding minimum wage sits [above/below] the equilibrium price for wage in the wage-labor market

dead weight loss

what is the term for a loss of total economic welfare that occurs when a market is not at its efficient equilibrium

price buyer pays - price seller receives

how to calculate tax wedge in goods market?

wage firms pay - wage workers receive

how to caculate tax wedge in labor market

tax wedge * quantity set by tax

how to calculate tax revenue with tax wedge

false

[true/false] - ideal corrective taxes cause dead weight losses

external cost

social cost = private cost + __

producer surplus - fixed costs

how to calculate profit for a producer/firm

cost

everything a producer must give up to produce a good

willingness to pay

max price consumer will be willing to buy a product for

corrective tax

social planning strategy that causes the firm to internalize social cost and decreases supply to the socially optimal quantity of supply

permit system

social planning strategy that limits quantity of a certain supply and lets market determine the price of limits that can be sold

increases

as the quantity set by a normal (noncorrective) taxes decreases, the size of deadweight loss always [increases/decreases]

true

[true/false] - tax revenue has a maximum that lies somewhere in the middle of no tax size and maximum tax size

decreased

price falls sharply while quantity stays the same. this can be explained by:

supply increased the same amount as demand [increased/decreased]

decreased

price falls sharply while quantity stays the same. this can be explained by:

Demand [increased/decreased] but supply was perfectly inelastic

increased

price falls sharply while quantity stays the same. this can be explained by:

supply [increased/decreased] but demand was perfectly inelastic

inelastic

a supply or demand curve that is completely straight vertically is considered perfectly [elastic/inelastic]

elastic

a supply or demand curve that is completely straight horizontally is considered perfectly [elastic/inelastic]

positive

equilibrium quantity

negative

for a [positive/negative] externality, the optimal quantity is lower than the equilibrium quantity

tax rebate

this increases the social value of a good and therefore increases demand for a positive externality

subsidy

this decreases the private cost of producing a good and increases supply for a positive externality

corrective tax

this increases the private cost of producing a good to match it to the external cost in a negative externality

tariff

in a goods market, this is a line set between the original equilibrium price and the world price

i did it

QUICK draw a graph with setting price before and after tariff - label FOR AFTER TARIFF the consumer surplus, producer surplus, deadweight loss, and the tax revenue