Microeconomics
vorbereitung klausur wintersemester 2016
vorbereitung klausur wintersemester 2016
Set of flashcards Details
| Flashcards | 104 |
|---|---|
| Language | English |
| Category | Micro-Economics |
| Level | University |
| Created / Updated | 03.01.2017 / 01.01.2018 |
| Weblink |
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what do points on the ppf represent
full resource employment and production efficiency
MRT
marginal rate of transformation
the law of increasing opportunity costs
it might be that consumers prefer more of a second product. this is preferred to as output efficiency. consumer's preferences are not shown on the ppf
def economic growth
an increase in the total output of an economy. Growth occurs when a society acquires new resources or when it learns to produce more using existing resources
capital goods and growth in poor and rich countries
rich countries find it easier than poor countries to devote resources to the production of capital, and the more resources that flow into capital production, the faster the rate of economic growth
in what do free market economices differ from command economies
system of governance, property ownership, status of enterprises, wealth distribution, societal focus
advantages communism
greater capital investments for economic development
disadvantages of communism
less production of consumer goods, misallocation of goods and misallocation of labour
what does the behaviour of buyers and sellers in a laissez-faire economy determine?
what gets produced, how it gets produced and who gets it
what are the three characteristics of free markets?
consumer sovereignity, free enterprise and distribution of output
what is consumer sovereignity?
idea that consumers ultimately dictate what will be produced by choosing what to purchase
free enterprise
freedom of individuals to start and operate private businesses in search of profits
distribution of output
the amount that any one household gets is determined in a decentralised way. It depends on its income and wealth
what is the basic coordinating mechanism in free markets?
price
which are the four parties involved in the circular flow of economic activity?
output markets, households, input markets and firms
def demand
a household's decision about what quantity of a particular output, or product to demand depends on a number of factors
how does a higher product price influence demand?
demand decreases
law of demand
negative relationship between price and quantity demanded
demand curve slope
negative
x axis demand curve
quantity
y axis demand curve
price
on what depends the shape of an individual household demand curve? (steep, flat, etc)
individual tastes and preferences of the household
def income
the sum of all household's wages, salaries, profits, interest payments, rents and other forms of earnings in a given period of time. It is a flow measure
def wealth or net worth
the total value of what a household owns minus what it owes. It is a stock measure
2 types of demand goods
normal goods and inferior goods
what are substitutes
goods that can serve as replacements to one another
what happens when the price of a substitute good increases?
demand for the other increases
complementary goods
goods that go together
what happens if the price of a complementary goods increases?
demand of the other one decreases as well
what are the three factors that determine the comobinations of goods and services that a household is able to buy?
income, wealth and prices
what are the two challenges regarding tastes and preferences and why is it difficult to generalise about them?
they are volatiles and idiosyncratic
what does A1>A2 & A2>A3 lead to ?
A1>A3
how do expectations affect demand?
future income, future prices
what is important to know about demand?
it does not only depend on current income, prices and tastes
what happens to the demand curve if income increases?
it shifts to the right
what happens if demand moves along the demand curve?
change in quantity demanded?
when does a demand curve shift?
when income rises or decreases?
Law of supply
The positive relationship between price and quantity of a good supplied
what happens if the market price increases? (supply)
quantity increases
what is the slope of a supply curve
positive
