# Shared Flashcard Set

## Details

ECN 143:Test 2 Review:Notes
ECN 143:Test 2 Review:Notes
34
Economics
03/14/2016

Term
 What is the formula for Total Revenue?-----------
Definition
 Price x Quantity----------
Term
 What is Unit elastic demand?----------
Definition
 Price and quantity demanded, change equally, so total revenue does not change.----------
Term
 What is Elastic Demand?--------------
Definition
 Slight changes in either price or quantity demanded, yield a very strong change in price or quantity demanded.-------------------
Term
 What is Inelastic Demand?----------
Definition
 Slight changes in either price or quantity demanded, yields little to no change in price or quantity demanded.-------------------
Term
 What does an Indifference curve show?-------------
Definition
 A set of a combination of goods that give equal utility to a consumer.-------------
Term
 What does a Budget line do?--------------
Definition
 Illustrates a set of combinations of goods of equal utility that are within a consumer's budget.---------
Term
 Where is the Utility Maximization Point?--------------
Definition
 The tangent point in which an indifference curve crosses a budget line.-------------------
Term
 Everything to the left of a budget line is what?---------------
Definition
 Affordable to the consumer-------------
Term
 Everything to the right of a budget line is what?---------------
Definition
 Un-affordable to the consumer---------------
Term
 Where does marginal cost intersect average variable cost?-----------------
Definition
 The minimum of the curve----------
Term
 Where does marginal cost intersect average total cost?-----------------
Definition
 The minimum of the curve-----------
Term
 Marginal cost must be where in relation to average total costs and average variable costs?------------------
Definition
 It must lie above it, to pull up the curve.-------------
Term
 If the average total cost is constant then what must marginal cost be?------------
Definition
 Equal to average total cost---------------
Term
 What calculations must be known for test 2?------------------
Definition
 Total Fixed Costs-----------Total Costs------------Average Fixed Costs------------Total Variable Costs-------------Average Variable Costs---------------Average Total Cost---------------Midpoint Formula: Used to Determine Price Elasticity of Demand-----------------How to Calculate Equilibrium price and Quantity----------------
Term
 What is the difference between short run and long run?------------------
Definition
 The short run has at least one fixed input, while in the long run all inputs may be varied.----------
Term
 What is a fixed input?----------
Definition
 An input like capital or land, that cannot be changed during the short run.-------------
Term
 What is variable input?-------------
Definition
 Inputs like labor, during the long run, that can change.---------------
Term
 Why is the long run average cost curve, U-shaped?-------------------
Definition
 The presence of economies of scale in the long run. Larger numbers of output reflect with lower total costs, until past the minimum efficient scale, and into diseconomies of scale, as decreasing returns of scale.---------------
Term
 What is transitivity of goods?---------
Definition
 If good A is preferred/indifferent to good B, and B is preferred/indifferent to good C, then good A is preferred/indifferent to good C.-------------
Term
 Why do indifference curves not intersect?------------
Definition
 They violate transitivity-------------
Term
 What is the mid-point formula for calculating price elasticity of demand?---------------
Definition
 (((Change in Quantity)/(Sum of Quantity/2))/((Change in Price)/(Sum of Price/2))----------------
Term
 What is Immediate Run aka Market Period?---------------
Definition
 A time period in which producers cannot respond to a price change, in which demand is inelastic, and all inputs are fixed.---------------
Term
 The change in output for hiring one additional unit of labor is what?----------------
Definition
 Marginal Product---------
Term
 What is the Marginal Rate of Substitution?---------------
Definition
 The rate at which a consumer is ready to give up one good in exchange for another good while maintaining the same level of utility--------
Term
 What is Excise Tax?---------
Definition
 A tax on consumption or sale of specific goods, for the purpose of gaining tax revenue from a market. This works only when taxing inelastically demanded goods (gas/cigarettes).--------------------
Term
 What is Income Elasticity?--------------
Definition
 Measures the responsiveness of the quantity demanded for a good or service to a change in the income of the people demanding the good, ceteris paribus. It is calculated as the ratio of the percentage change in quantity demanded to the percentage change in income.-----------
Term
 How do you calculate equilibrium price?---------------
Definition
 Set quantity demanded equal to quantity supplied, and solve for price.--------------
Term
 How do you calculate equilibrium quantity?--------------------
Definition
 Insert equilibrium price into the demand or supply function and solve.---------
Term
 Change in Total Cost Divided by Change in Quantity equals what?----------------
Definition
 Marginal Costs-------
Term
 Average Total Cost equals what?----------
Definition
 Total Cost divided by Quantity------
Term
 How do you calculate Total Fixed Costs?-----------
Definition
 Total Costs - Variable Costs-----------
Term
 How do you calculate Total Variable Costs?-----------
Definition
 Total Costs - Total Fixed Costs-----------
Term
 How do you calculate Average Variable Costs?-----------
Definition
 Variable Costs divided by Quantity-----------
Term
 How do you calculate Average Fixed Costs?-----------
Definition
 Fixed Costs Divided by Quantity------------
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