MSH_01 Macroeconomics
These flashcards are meant for preparation the lecture of Simon
These flashcards are meant for preparation the lecture of Simon
What is defined as EQUILIBRIUM?
Equilibrium is defined to be the price-quantity pair where the quantity demanded is equal to the quantity supplied, represented by the intersection of the demand and supply curves
Where (in which markets) does the supply/demand modell apply?
What is defined as CONSUMER SURPLUS?
Consumer surplus is the total benefit or value that consumers receive beyond what they pay for the good.
What is PRODUCER SURPLUS?
Producer surplus is the benefit that lower cost producers enjoy by selling a market price.
What are WELFARE EFFECTS?
Welfare effects are gains and losses to consumers and producers.
How can I determine the CONSUMER SURPLUS in the supply-demand model?
The consumer surplus is defined as the delta between ecquilibrium price and what the consumer is willing to pay (orange area in graph)
How can I determine the PRODUCER SURPLUS in the supply-demand model?
The producer surplus is the delta between the equilibrium price and below (see green area in graph). It determines the cost to produce a certain good and the market price.
How is WELFARE BENEFIT measured?
Welfare benefit is measured by consumer and producer surplus in a competetive market.
What does an (almost) vertical demand curve mean?
A vertical demand curve mean that there is no price sensitivity in the market. Consumers are willing to pay "every" price
What is defined as ECONOMIC EFFICIENCY?
Economic efficiency is defined as maximization of aggregate consumer and producer surplus
What is strategic dominance in game theory?
In game theory, strategic dominance (commonly called simply dominance) occurs when one strategy is better than another strategy for one player, no matter how that player's opponents may play
What is NASH EQUILIBRIUM?
Nash equilibrium is a solution concept of a non-cooperative game involving two or more players, in which each player is assumed to know the equilibrium strategies of the other players, and no player has anything to gain by changing only their own strategy
What is defined as "externalities" or "market failure"?
In economics, an externality is the cost or benefit that affects a party who did not choose to incur that cost or benefit. Example: Air pollution from motor vehicles is an example of a negative externality.
What is described as "farmers dilemma"?
farmers dilemma = price insensitive market --> preference for food generates a price inelastic demand curve
What is determined by the price elasticity of demand?
The own price elasticity of demand is a critical determant of how industry sales respond to technology changes, innovations and changes in prices of input
Does the polluter pay all pollution tax?
The more price insensitive (steeper the demand curve) for the product, the more polluters can shift production taxes on to customers!
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Cartes-fiches
What is defined as EQUILIBRIUM?
Equilibrium is defined to be the price-quantity pair where the quantity demanded is equal to the quantity supplied, represented by the intersection of the demand and supply curves
Where (in which markets) does the supply/demand modell apply?
What is defined as CONSUMER SURPLUS?
Consumer surplus is the total benefit or value that consumers receive beyond what they pay for the good.
What is PRODUCER SURPLUS?
Producer surplus is the benefit that lower cost producers enjoy by selling a market price.
What are WELFARE EFFECTS?
Welfare effects are gains and losses to consumers and producers.
How can I determine the CONSUMER SURPLUS in the supply-demand model?
The consumer surplus is defined as the delta between ecquilibrium price and what the consumer is willing to pay (orange area in graph)
How can I determine the PRODUCER SURPLUS in the supply-demand model?
The producer surplus is the delta between the equilibrium price and below (see green area in graph). It determines the cost to produce a certain good and the market price.
How is WELFARE BENEFIT measured?
Welfare benefit is measured by consumer and producer surplus in a competetive market.
What does an (almost) vertical demand curve mean?
A vertical demand curve mean that there is no price sensitivity in the market. Consumers are willing to pay "every" price
What is defined as ECONOMIC EFFICIENCY?
Economic efficiency is defined as maximization of aggregate consumer and producer surplus
What is strategic dominance in game theory?
In game theory, strategic dominance (commonly called simply dominance) occurs when one strategy is better than another strategy for one player, no matter how that player's opponents may play
What is NASH EQUILIBRIUM?
Nash equilibrium is a solution concept of a non-cooperative game involving two or more players, in which each player is assumed to know the equilibrium strategies of the other players, and no player has anything to gain by changing only their own strategy
What is defined as "externalities" or "market failure"?
In economics, an externality is the cost or benefit that affects a party who did not choose to incur that cost or benefit. Example: Air pollution from motor vehicles is an example of a negative externality.
What is described as "farmers dilemma"?
farmers dilemma = price insensitive market --> preference for food generates a price inelastic demand curve
What is determined by the price elasticity of demand?
The own price elasticity of demand is a critical determant of how industry sales respond to technology changes, innovations and changes in prices of input
Does the polluter pay all pollution tax?
The more price insensitive (steeper the demand curve) for the product, the more polluters can shift production taxes on to customers!
