Econ Final Weeks 3 & 4

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Economics 1014 Final

Created May 12, 2011
by ccatalano72

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	Side A	Side B
1	What is the demand curve measuring?	This measures the relationship between price per unitand the quantity consumers are willing...
2	What is the supply curve measuring?	This measures the relationship between price per unitand the quantity producers are willing...
3	How do we find equilibrium?	Where demand and supply intersect. This is the only price that creates no shortage and no surplus....
4	What is the difference between change in demand and change in quantity demanded?	One indicates a movement along a single demand curve; the other indicates a shift to a brand...
5	What is the difference between change in supply and change in quantity supplied?	One indicates a movement along a single supply curve; the other indicates a shift to a brand...
6	What happens to Pe and Qe when either demand or supply changes?DEMAND INCREASES	Shifts right -----> higher price and higher quantity
7	What happens to Pe and Qe when either demand or supply changes?DEMAND DECREASES	Shifts left ------> lower price and lower quantity
8	What happens to Pe and Qe when either demand or supply changes?SUPPLY INCREASES	Shifts right ------> lower price and higher quantity
9	What happens to Pe and Qe when either demand or supply changes?SUPPLY DECREASES	Shifts left ------> higher price and lower quantity
10	What happens to Pe and Qe when both demand and supply change?BOTH DEMAND AND SUPPLY INCREASE	We don't know what happens to price, but we know quantity increases
11	What happens to Pe and Qe when both demand and supply change?BOTH DEMAND AND SUPPLY DECREASE	We don't know what happens to price, but we know quantity decreases
12	What happens to Pe and Qe when both demand and supply change?DEMAND INCREASES / SUPPLY DECREASES	Price increases but we don't know what happens to quantity
13	What happens to Pe and Qe when both demand and supply change?DEMAND DECREASES / SUPPLY INCREASES	Price decreases, but we don't know what happens to quantity
14	What is the price elasticity of demand?	This tells us how responsive consumers are to price changes for this good. It is measuring...
15	What is the equation for Elasticity of Demand?	Ed= %ΔQd / %ΔPOUTPUT IS A NEGATIVE NUMBER
16	What is the price elasticity of supply?	This tells us how responsive producers are to pricechanges for this good. It is measuring the...
17	What is the equation for Elasticity of Supply?	Es = %ΔQs / %ΔPOUTPUT IS A POSITIVE NUMBER
18	What is the income elasticity of demand?	This tells us how responsive consumers are to income changes when buying this good. When income...
19	What is the income elasticity of demand equation?	EI = %ΔQd / %ΔI
20	What is the cross price elasticity of demand?	This tells us how responsive consumers are to price changes of a related good when buying this...
21	What is the cross price elasticity of demand equation? Assume that tea and coffee are substitutes.	EI = %ΔQd, tea / %ΔPcoffee
22	If the elasticity number is greater than 1, is the good relatively elastic or relatively ...	It would be relatively elastic
23	If the elasticity number is less than 1, is the good relatively elastic or relatively inelastic?	It would be relatively inelastic
24	What is market efficiency?	In the absence of market failure, the free market system gives us the best allocation of resources....
25	What is consumer surplus?	Some of the economic surplus is earned by the consumers whenever they get lucky enough to pay...
26	What is producer surplus?	Some of the economic surplus is earned by the producers whenever they get lucky enough to sell...
27	What is deadweight loss?	This is the amount of surplus lost to society whenever we don’t produce and consume the most...
28	What is a resource misallocation?	When we do not produce and consume the most efficient amount. Resources get wasted and we lose...