Download Eco 101 Principles of Microeconomics

Eco 101
Principles of Microeconomics
Intro to
Econ
Supply &
Demand
Elasticity
Market
Failure
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What is scarcity?
With limited resources and
unlimited wants, this is the
central economic problem.
Row 1, Col 1
What is the law of demand?
This law tells us that price is
inversely related to quantity,
holding all else constant.
1,2
What is be < 0?
Since the demand curve always
slopes down, we expect
elasticity to have this property.
1,3
What is a negative externality or external cost?
Pollution is a prime example of
this type of market failure.
1,4
What is opportunity cost?
This refers to the next best option
not chosen.
2,1
What are inferiors goods?
An increase in income will
actually decrease the demand
for these types of goods.
2,2
What is a DECLINE of 50%?
When demand elasticity is -5,
and 10% price increase causes
this change in quantity
demanded.
2,3
What is nonexclusivity?
A good has this property when
you cannot prevent non-payers
from consuming it.
2,4
What is concave?
The production possibilities
curve takes this shape due to
resources being unequally
suiting to different uses.
3,1
What are complements?
Peanut butter and jelly are
prime examples of these types
of goods.
3,2
What is lack of substitutes? or What is it’s a necessity?
We expect gasoline demand to
be inelastic for this reason.
3,3
What is the free rider problem?
This problem occurs with
public goods when people
attempt to enjoy the benefits of
such goods without paying for
them.
3,4
What is a normative statement?
“Taxes are too high,” is an
example of this type of
statement.
4,1
What is shift right?
When the price of Coke rises,
we expect the demand for Pepsi
to do this.
4,2
What is a vertical line?
A perfectly inelastic supply
curve takes this shape.
4,3
What is underproduction of the good or service?
Positive externalities are a
market failure that results in
this.
4,4
What is land?
This factor of production refers
to all types of natural resources.
5,1
What is quantity?
With an increase in both supply
and demand, we know this must
increase in equilibrium.
5,2
What is inelastic?
When a good is not easily
stored, its supply has this
characteristic.
5,3
What is nonexclusivity and nonrivalry?
Flood control is considered a
public good, because it has
these two properties.
5,4