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ECN 143:Notes:Day 10
ECN 143:Notes:Day 10
41
Economics
Undergraduate 1
02/15/2016

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Term
What was the test average?
Definition
57%
Term
What was the highest test average?
Definition
88%
Term
Income and substitution effect explain why what?
Definition
Product demand curves are down sloping
Term
What is an example of capital as a factor of production?
Definition
An automobile factory owned by Ford Motor Company
Term
What does the law of demand state?
Definition
Other things equal, the higher the price of a good, the lower is the quantity demanded.
Term
If both supply of and demand for a good decreased, it could be predicted that what?
Definition
Equilibrium quantity decreases regardless, and price is ambiguous.
Term
Why are supply curves upward sloping?
Definition
Sellers are motivated by a desire to cover costs and earn a profit.
Term
What if demand is unit elastic, what is total revenue?
Definition
Remains constant as price rises or falls.
Term
What does a change in the demand for a product refer to?
Definition
A shift of the product's demand curve right or left.
Term
What factors are held constant along a given demand curve for a good?
Definition
Consumer incomes and the prices of other goods.
Term
Equilibrium price will increase when what?
Definition
Supply Decreases and Demand Increases
Term
What is Ceteris Paribus?
Definition
With other conditions remaining the same.
Term
What did a classic study of Philadelphia mass transit reveal?
Definition
The demand for mass transit was more elastic in the long run than in the short run.
Term
How do you calculate a shortage that has been provided to you in units?
Definition
Subtract the Demand Function from the Supply Function Set Equal to Number of Units that make up the shortage
Term
How do you calculate a surplus that has been provided to you in units?
Definition
Subtract the Supply Function from the Demand Function Set Equal to Number of Units that make up the surplus
Term
When given a supply function and demand function, how do you calculate equilibrium price?
Definition
Set the supply function equal to the demand function and solve for "P".
Term
If you know the equilibrium price, how do you solve for equilibrium quantity?
Definition
Plug the equilibrium price in for "P" in either the supply or demand function.
Term
How do you calculate Economic Profit?
Definition
Total Revenue minus Total Cost
Term
How do you calculate Total Revenue?
Definition
Price x Quantity
Term
Price is not a shifter of what?
Definition
Supply or Demand
Term
What are big tips for tests?
Definition
1.)Show your work
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2.)Finish the thought of a question
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3.)Answer quickly and with confidence
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Term
What are topics covered by Homework Set 2?
Definition
Using Midpoint Formula to Calculate Price Elasticity of Demand
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Calculate Market Equilibrium Price and Quantity
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Calculate Price Elasticity of Demand at Equilibrium using the algebraic formula
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How to illustrate demand elasticity at different prices using the algebraic formula
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Term
What if Cross Price Elasticity of Demand is greater than zero?
Definition
The Percentage Change of Quantity Demanded of Good A has a direct relationship with the Percentage Change of Price of Good B.
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Indicating these goods are Substitutes.
Term
How do you Calculate Cross Price Elasticity of Demand?
Definition
(Percentage Change of Quantity Demanded of Good A)/(Percentage Change in Price of Good B)
Term
What if Cross Price Elasticity of Demand is less than zero?
Definition
The Percentage Change of Quantity Demanded of Good A has an inverse relationship with the Percentage Change of Price of Good B.
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Indicating these goods are complementary.
Term
How do you calculate the income elasticity of demand?
Definition
The Percentage Change of Quantity Demanded of Good A Divided By the Percentage Change in Income
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Term
What does it mean when Income Elasticity of Demand is greater than zero?
Definition
The Percentage Change of Quantity Demanded of Good "A" Has a Direct Relationship with Percentage Change in Income
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It means that the good, is a normal good.
Term
What does it mean when Income Elasticity of Demand is less than zero?
Definition
The Percentage Change of Quantity Demanded of Good "A" Has an Inverse Relationship with Percentage Change in Income
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It means that the good, is an inferior good.
Term
What is Elasticity always?
Definition
A percentage change in something divided by the percentage change of something else.
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Term
What is Price Elasticity of Supply?
Definition
A measure of producer responsiveness to price changes.
Term
How do you calculate Price Elasticity of Supply?
Definition
Percentage Change in Quantity Supplied Divided by Percentage Change in Price
Term
What is the one determinant for price elasticity of supply?
Definition
Time
Term
What is longer than a market period?
Definition
A Short run
Term
What is longer than a short run?
Definition
A Long run
Term
What is a Market Period?
Definition
A time so short, that producers cannot respond to changes in price.
Term
How is time kept in Economics?
Definition
The variability of inputs.
Term
What does elasticity of supply imply during the Market Period?
Definition
The supply curve is an unchanging vertical line.
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Perfectly Inelastic
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Term
Equilibrium quantity cannot change if supply cannot what?
Definition
Change
Term
What is a Short Run?
Definition
A time-frame in which the inputs of some but not all productive resources may be varied.
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It is a normal upward sloping supply curve.
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Term
What is a long run?
Definition
A time frame when all resources may be varied and producers can respond infinitely to changes in demand.
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Term
What is the Supply Curve implied to be like in the Long Run?
Definition
Horizontal aka Completely Elastic
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