Econ 302 stuvia Study guides, Class notes & Summaries

economics of ideas - Answer -involves increasing returns to scale -lead to problems with Adam-Smiths invisible hand theory Romer Model divides the world into - Answer 1. Objects -capital and labor inputs from Solow Model -these are finite 2. Ideas -used in production of goods -virtually infinite *this distinction forms the basis for modern theories of economic growth Sustained economic growth occurs because of __________________ - Answer new ideas ideas ---> nonrivalry ---&g...

Substitutes.... When the price of Y increases then X goes higher.. - Answer Are they complements or subs? X = M+Py/2Px When Py gets bigger, than X gets higher so this means they are Only can add the exponents when they are being multiplied... if you are adding them then you must plug them in ... if they more than double after plugging in then it is increasing returns to scale. - Answer Other side The s-t run average cost curve reveals nothing regarding returns to scale. - Answer A firm...

Economics - Answer The social science that studies production and trade. Positive Analysis - Answer Analysis that attempts to describe the way things are in reality Normative Analysis - Answer Analysis that attempts to describe the way things should be Theory - Answer A principle that explains some phenomenon. Model - Answer A simplified representation of a phenomenon How models work: - Answer Assumptions → Analysis → Implications The Four Starting Points of Economics - Ans...

What does the study of macroeconomics entail? - Answer The study of economy at the large scale level, examining total output, the price level, and other aggregate measures in the economy. (Think macro as the forest and micro as the trees) What is the capital? What are some examples of capital? - Answer 1 out of 4 resources. The tools, machinery, infrastructure, and knowledge used to produce goods and services. Resources are: A) Relatively plentiful in all countries. B) Relatively evenly di...

Consumer Theory Assumption: - Answer A consumer will choose the best bundle of goods and services that he or she can afford Rational Behavior - Answer People do not make decisions that intentionally make them worse off Budget Constraint Definition - Answer Shows the set of all bundles that a consumer can afford Budget Constraint Assumption - Answer There are two goods: Good X and Good Y Budget Constraint Formula - Answer Px(X) + Py(Y) = M Slope of Budget Constraint - Answer - Px /...

price- consumption curve - Answer curve tracing the utility maximizing combinations of two goods as the price of one good changes individual demand curve - Answer a curve that relates the price of good x to the quantity of good x that a consumer will buy holding all other factors -as price falls, consumers can attain higher levels of utility -each point of the idc represents a utility maximizing choice by the consumer income- consumption curve - Answer curve tracing the utility- maximi...

We assume that the representative consumer's preferences exhibit the properties that - Answer consumption and leisure are both normal goods and that the consumer likes diversity in his or her consumption bundle. We assume leisure is a normal good. This implies that - Answer an increase in taxes decreases the demand for leisure. In the model presented in Chapter 4, the vertical intercept of the consumer's budget line is equal to - Answer wh + π -T At the optimal consumption bundle, th...

Marginal Rate of Transformation - Answer the rate at which a consumer can trade one good for another -the amount of good y that a consumer has to give up in order to obtain an extra unit of good x -slope of the budget constraint -value is -Px/Py Marginal Rate of Substitution - Answer the rate at which a consumer is willing to trade one good for another -the amount of good y that a consumer is willing to give up to obtain an extra unit of good x -slope of the indifference curve -value is...

Profit - Answer difference between revenue and total cost pi(q) = R(q)-TC(q) Revenue - Answer Price multiplied by quantity R = P*q Price Talker - Answer When firms (or buyers) take the market price as given and make their selling (or buying) decisions accordingly. Level of output has no effect on price. For price takers, Price = Marginal Revenue Firms are more likely to be price takers when - Answer -there are many buyers and sellers -there is product homogeneity -the market has fre...

In the supply and demand model, we assume that there are _____ buyer(s) and _____ seller(s) in the market. - Answer Many; Many Which of the following factors shift the demand curve? I)Consumer Income II)Price of the Good III)Prices of Substitute Goods IV)The Number of Consumers - Answer I, III, IV Electric guitars and amplifiers are complement goods, and electric guitars and acoustic guitars are substitute goods. A decrease in the price of amplifiers _____ the number of electric guitar...