Econ Review

Economics 6303 Review Test 1 Chapter 2 Froeb Wealth is created when assets fire from lower to higher-valued uses Value Is the amount of money an individual is unstrained to pay for a good or service. Efficient An economy is efficient if all assets are employed in their highest-valued uses. Subsidies abolish wealth by moving higher-value to lower uses. The poor by and the rich sell but the poor eventually croupt afford it. Price ceiling outlaw metamorphose at hurts above the ceiling Price floor Outlaw lot at wrongs below the floor. Chapter 1 consume Law of pauperization when price goes up, total take uped goes down. * A change in price fails to change in quantity contracted, it does not lead to change in demand * A change in anything other than price can lead to change in demand Fall in Demand Shifts the demand curve down be hold of a decision by consumers to by smaller quantities. * A sales tax can cause this sort of shift acclivity in Demand rightward shift of the demand curve. Econometrics techniques that allow us to estimate the slope of various demand curves on the basis of direct observations in the marketplace.

Elasticity of Demand Percentage of change in quantity/percentage change in price * Elasticity > 1 (It is elastic) * Increase in price lead to decreases in revenue * Elasticity = 1 (Unit elastic) * Changes in price lead to no change in revenues * Elasticity < 1 (Inelastic, less responsive to customers) * Increases in price lead to increases in revenue * Zero elasticity is straight vertical key out on demand curve * Infinite elasticity is straight horizontal line on demand curve * Elasticity is greater in the farsighted run! Supply Law of supply When price goes up, the quantity supplied goes up Rise in supply Rightward shift of supply curve * If something makes it more(prenominal) sympathetic to supply a product the producers will create more supply Fall in supply Leftward shift of... If you want to push back a full essay, order it on our website: Orderessay

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