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Macroeconomics FSU Hammock (1).
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Macroeconomics FSU Hammock (1).
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Macroeconomics FSU Hammockscarcity - ANS-the fact that there is only so much of a certain thing in the world is..
opportunity cost - ANS-value of the best thing given up
tradeoffs - ANS-we must trade one thing against another
Rational self interest assumption - ANS-ex. if you want to do well, you go to class
models - ANS-framework for thinking about things- or an economic phenomenon
ceteris paribus - ANS-other things equal, of other things the same
positive economics - ANS-the way the world is: "it is"
normative economics - ANS-the way the world ought to be: "it's good or bad"
correlation vs. causation theory - ANS-the fact that one thing happened after another, or at the
same time, doesn't mean that one caused the other
correlation vs. causation theory - ANS-what is this an example of:
ice cream and short sales
heat causes higher sales in both but one does not cause the other
voluntary exchange creates value- true or false - ANS-true: give up what they like lessened get
what they like more
demand - ANS-a relationship between the price of a good or service and the quantity demanded
law of demand - ANS-as price rises, the quantity demanded falls
diminishing marginal utility - ANS-as we consume more of something, additional units don't
bring us as much satisfaction
consumer surplus - ANS-the difference between what a consumer is willing to pay and what the
consumer actually pays
things that can shift demand - ANS-what are these examples of:
changes in product quality of information about it
changes in prices of substitutes and complements
seasonal changes/natural disasters
, changes in income
changes in expectations
changes in number of consumers
supply - ANS-a relationship between a price producers receive and the quality produced
the law of supply - ANS-as price rises, quantity supplied rises
producer surplus - ANS-the difference between the price at which a good is sold, and the cost of
producing that additional unit of the good
true - ANS-producer surplus eventually becomes consumer surplus when people spend their
income
things that shift supply - ANS-what is this an example of:
price of inputs
taxes and subsidies
technology
changes in the # of producers
changes in expectations
natural disasters, weather, regulations
equilibrium - ANS-its a resting place; the quantity supplied= quantity demanded
yes - ANS-is equilibrium efficient?
economic efficiency - ANS-there is no reallocation of goods and resources that has benefits
greater than costs
there is a surplus because producers create more of it but consumers want less of it - ANS-what
happens if the price of a good is above equilibrium?
they will keep cutting the price until it hits equilibrium again - ANS-what will people most likely do
when there is a surplus?
there will be a shortage because consumers want more of it but producers create less of it -
ANS-what happens when the price of a good is below equilibrium?
supply would shift to the right - ANS-what type of shift would happen if the technology for
producing potato chips improves
supply would shift to the left due to the fact that it got harder to produce tires - ANS-what type of
shift would happen to the market for tires if oil prices go up?
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