Term
How does one Algebraically Calculate Budget Constraints?
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Definition
"Total Income"= ("Price of Good X" * "Amount of Good X Purchased") + ("Price of Good Y" * "Amount of Good Y Purchased")
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Term
How does one obtain the expression for the budget line?
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Definition
"Budget Line"=("Total Income"/"Price of Good Y")-("Price of Good X"/"Price of Good Y
")*"Amount of Good X purchased"
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Term
What is the Horizontal Intercept of a Budget Line?
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Definition
"Total Income"/"Price of Good X"
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Term
What is the Vertical Intercept of a Budget Line?
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Definition
"Total Income"/"Price of Good Y"
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Term
What is the slope of a budget line?
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Definition
-Price of Good X/Price of Good Y=Price Ratio
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Term
What is the midpoint formula?
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Definition
((Change in Quantity)/((q0+q1)/2))/((Change in Price)/((p0+p1)/2))
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Term
What does midpoint formula do?
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Definition
Takes the average elasticity between any two points along a demand function.
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Term
What does (Ed^m) represent?
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Definition
Elasticity of Demand found through midpoint formula.
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Term
How to solve for equilibrium price?
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Definition
Set quantity demanded equal to quantity supplied and solve for P.
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Term
How to solve for equilibrium quantity?
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Definition
Plug the equilibrium price into the quantity supplied or quantity demanded function and solve.
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Term
What is the algebraic formula for Elasticity?
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Definition
(Slope)*(Price/Quantity Demanded)
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Term
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Definition
Ratio of absolute changes of quantity demanded and quantity supplied.
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Term
What is the slope of this demand function?
Q=A-BP
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Definition
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Term
What is another interpretation of how one obtains the expression for the budget line?
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Definition
"Budget Line"=("Vertical Intercept")-("Price of Good X"/"Price of Good Y
")*"Amount of Good X purchased"
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