Term
| Define "discuss" in essay term language |
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Definition
| Offer a considered and balanced review that includes a range of arguments, factors or hypotheses. Opinions or conclusions should be presented clearly and supported by appropreate evidence. |
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Term
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Definition
| make an appraisal by weighing up the strengths and limitations (pros/cons, LR/SR) |
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Term
| Define demand and state the law of demand |
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Definition
D= q willing and able to buy at a p at a time
Law of D: If price falls, then q demanded rises |
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Term
| What factors cause shifts in the D curve? (6) |
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Definition
Income (+Tax)
Substitutes/Complements
Season
Tastes
Advertising
Age structure |
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Term
Exceptions in the law of D: (3)
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Definition
Veblem goods: snobbish goods like Porsche (as p rises, d rises)
Giffen goods: basic food stuff (Irish changed from potatoes to bread)
Bandwagon effect: people think p will rise, so they buy & buy (e.g. german hyperinflation) |
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Term
| Define supply, state law of supply |
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Definition
S=supply is the willingness and ability of producers to produce a quantity of a good or service at a given price in a given time period
Law of S: as the price of a product rises, the quantity rises |
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Term
| What causes shifts in S curve? (4) |
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Definition
cost of production (LLC)
price of other products
state of technology
govt. intervention (1.taxes,2.subsidies) |
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Term
| The values giving the S and D curves |
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Definition
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Term
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Definition
| A state of rest, self-perpetuating in the absence of outside factors |
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Term
| Price elasticity of demand formula? |
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Definition
PED= (%Δq)/(%Δp)
PED=((q1-q2/q1) * 100) / ((p1-p2/p1) * 100) |
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Term
| When is PED elastic? perfectly elastic? perfectly inelastic? |
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Definition
PED > 1
PED = ∞ (horiz. line, e.g. computers-so many competitors that your product doesnt matter)
PED = 0 (vertical line, e.g. water in the desert) |
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Term
XED formula?
What if...
XED=-?
XED=0?
XED=+? |
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Definition
(%Δqx/%Δpy)
- = close complements (car batt. / cars)
0 = unrelated (milk/cars)
+ = close substitutes (apples/pears)
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Term
YED formula?
What if..
YED > 0
YED < 0 |
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Definition
(%ΔqD)/(%ΔY)
normal goods
inferior goods (discounter stuff) |
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Term
| Define law of diminishing returns |
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Definition
| As extra units of a variable factor are added to a given quantity of a fixed factor, the output from each additional unit of the variable factor will eventually diminish |
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Term
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Definition
SR=at least one factor is fixed
LR=all factors are fixed |
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Term
What do these stand for?
SR,LR,Y,TP,TFP,TVP,AP,MP,AFC,AVC,AC,MC, SRAC |
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Definition
| shortrun, longrun, income, total price, total fixed price, total variable price, average product, marginal product, average fixed cost, average variable cost, average cost, marginal cost, short run average cost |
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Term
PES formula?
What if..
PED > 1
PED < 1 |
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Definition
(%Δqs)/(%Δps)
low cost increase if you try to increase supply, e.g. fishing a bit longer or more
sharp cost rise if you try to increase supply, e.g. steel (new factory) |
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