Help
Options
Didn't know it?
click below
click below
Knew it?
click below
click below
Don't Know
Remaining cards (0)
Know
retry
shuffle
restart
0:00
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.
Normal Size Small Size show me how
Normal Size Small Size show me how
Econ Pre-Test 1a
| Question | Answer |
|---|---|
| What happens If the market price is above the equilibrium price, quantity supplied (QS)is greater than quantity demanded (QD), | Creates a Surplus (prices will eventually fall until it reaches equilibrium) |
| Surplus drives prices | Down |
| A shortage happens when... | the market price is below the equilibrium price, quantity supplied is less than quantity demanded? |
| Surplus drives prices down and happens when... | you have a lot of excess inventory that cannot sell. Will you put them on sale? It is most likely yes. Once you lower the price of your product, your product’s quantity demanded will rise until equilibrium is reached. |
| Shortage drives prices up when... | your product is always out of stock. Will you raise the price to make more profit? Most for-profit firms will say yes. Once you raise the price of your product, your product’s quantity demanded will drop until equilibrium is reached. , |
| If a surplus exist, price must ______in order to entice additional quantity demanded and reduce quantity supplied until the surplus is eliminated. | FALL |
| If a shortage exists, price must ______ in order to entice additional supply and reduce quantity demanded until the shortage is eliminated. | RISE |
| EQUILIBRIUM price and quantity are determined by the intersection of _______ and ____ | Supply, Demand |
| How to calculate CS (Consumer Surplus)? | CS= 1/2 X b(base) x h(height) |
| How Higher Price Reduces CS (consumer surplus) | 1. Fall in CS due to buyers leaving market 2. Fall in Cs due to remaining buyers paying higher P. |
| Producer surplus (PS) | the amount a selleris paid for a good minus the seller's cost PS= P– cost |
| How a lower Price reduces PS | 1. Fall in PS due to sellers leaving market 2. Fall in PS due to remaining sellers getting lower Price |
| CS (consumer surplus) = | (value to buyers) – (amount paid by buyers) = buyers' gains from participating in the market |
| PS (producer surplus) = | (amount received by sellers) – (cost to sellers) = sellers' gains from participating in the market |
| How to calculate PS (producer surplus) | PS = 1⁄2 x b(base) x h(height) |
| How to calculate WELFARE? | CS (consumer surplus) + PS (producer surplus) |
| What is an Autarky situation? | when a country does not participate in international trade. Only produce what they want in their own country. NO TRADE!! |
| What is Welfare under autarky? . | Its supply and demand are entirely contained in the country itself. The benefits that consumers and producers receive when buying and selling goods |
| Disadvantages of autarky | – economies (countries) are much less efficient at producing goods than countries that trade\n– citizens are less satisfied\n– goods are much more expensive to consume and produce than in countries that use free trade. |
| Equilibrium Forumula | Qd = Qs |
| Free Trade | – trade between countries that is without government restrictions |
| Tariffs | – a tax imposed by a government on imports |
| World Price | price at which that good can be bought or sold abroad –if wp is lower than the autarky price, trade leads to imports and a fall in domestic price compared to wp |
| Imports ________ consumer surplus, but __________ producer surplus | increase, decrease |
| Exports ________ consumer surplus, but _________ producer surplus | decrease, increase |
| World Trade Organization | multinational organization as well as adjudicate trade disputes between member countries |
| Imports | goods and services purchased from other countries |
| Exports | goods and services sold to other countries |
Created by:
Sankofarae
Popular Economics sets