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Eco 101 Principles of Microeconomics 100 200 400 300 400 Intro to Econ Supply & Demand Elasticity...
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Transcript of Eco 101 Principles of Microeconomics 100 200 400 300 400 Intro to Econ Supply & Demand Elasticity...
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Intro to Econ
Supply & Demand
ElasticityMarket Failure
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Row 1, Col 1
With limited resources and unlimited wants, this is the central economic problem.
What is scarcity?
1,2
This law tells us that price is inversely related to quantity,
holding all else constant.
What is the law of demand?
1,3
Since the demand curve always slopes down, we expect
elasticity to have this property.
What is be < 0?
1,4
Pollution is a prime example of this type of market failure.
What is a negative externality or external cost?
2,2
An increase in income will actually decrease the demand
for these types of goods.
What are inferiors goods?
2,3
When demand elasticity is -5, and 10% price increase causes
this change in quantity demanded.
What is a DECLINE of 50%?
2,4
A good has this property when you cannot prevent non-payers
from consuming it.
What is nonexclusivity?
3,1
The production possibilities curve takes this shape due to
resources being unequally suiting to different uses.
What is concave?
3,3
We expect gasoline demand to be inelastic for this reason.
What is lack of substitutes? or What is it’s a necessity?
3,4
This problem occurs with public goods when people
attempt to enjoy the benefits of such goods without paying for
them.
What is the free rider problem?
4,4
Positive externalities are a market failure that results in
this.
What is underproduction of the good or service?
5,2
With an increase in both supply and demand, we know this must
increase in equilibrium.
What is quantity?