Shared Flashcard Set

Details

ec 201
Real Economics for real people
4
Economics
Undergraduate 3
06/27/2006

Additional Economics Flashcards

 


 

Cards

Term
The supply of woots us given by Qs=2P. The demand for woots is given by Qd=40-2P. What will be the equilibrium price and quantity of woots?
Definition
P=10, Q=20

. At equilibrium the quantity supplied is equal to the quantity demanded: Qs = Qd. We are given an equation for supply and an equation for demand. If we insert the supply equation and the demand equation into the equilibrium equation, we have 2P = 40 – 2P. If we then add 2P to both sides of the equation, we have 4P = 40. Then, by dividing both sides of the equation by 4, we have P = 10. If we substitute this value for P into the supply equation, we have Qs = 2(10) = 20. If we substitute the same value for P into the demand equation, we have Qd = 40 – 2(10) = 40 – 20 = 20. Since we get the same value for the quantity supplied and the quantity demanded, this verifies that we have indeed found the equilibrium quantity.
Term
The elasticity of DEMAND for zoozoos is 0.5. Due to a gov't price control, the price of zoozoos increases by 20%. What will happen to the quantity demanded?
Definition
Quantity demanded will decrease by 10%

The elasticity of demand is the percentage change in quantity demanded, divided by the percentage change in price: e = %ΔQd/%ΔP. In this question, we are given that e = 0.5, and %ΔP = 20. If we substitute these values into the elasticity equation, we have 0.5 = %ΔQd/20. By multiplying both sides of this equation by 20, we find that the quantity demanded changes by 10%.
Term
Which of the following would shift the SUPPLY curve for tomatoes?
Definition
A decrease in the price of fertilizer, which is an input in tomatoe production.


Choice (b) is the only one that involves a shift in the supply curve. Choices (a), (c), and (d) all refer to things that would shift the demand curve.
Term
With tariffs, import quotas and VERS(Voluntaryu export restraints), each of these interferes w/ Int'l trade, and thus there are some diffs. If it is absolutely necessary to interefere w/ internationl trade, it may be wise to use a VER. Why?
Definition
A VER may increase the profits of producers in the exporting country and thus they may be less likely to push their govt to retailiate.
Supporting users have an ad free experience!