ECON-1006EL Study Guide - Fall 2018, Comprehensive Midterm Notes - Demand Curve, United States Dollar, Marginal Utility
12 Oct 2018
School
Department
Course
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ECON-1006EL
MIDTERM EXAM
STUDY GUIDE
Fall 2018
Statements.
The price elasticity of demand is the ratio of the percent change in the quantity
demanded to the percent change in the price as one moves along the demand curve
A perfectly inelastic demand curve for a product (ie insulin) would mean that the quantity
demanded does not respond at all to the change in the price of the product (insulin).
If an individuals income rises, and there consumption (or demands) also increase, this
means the goods are normal goods for that individual.
Concept: Supply and Demand.
Why I think it is a key concept: The concept of supply and demand is
extremely important as the diagrams can show where equilibrium is
reached, and how the increase or decrease of different factors including,
land, labour, capital, income, and competitors prices can affect the
demand of a certain product. This concept also shows surplus and
shortages, overall showing how much of a product is demanded or
deemed necessary. 5 Key Concepts of the supply and demand curve…
-The demand curve
-The supply curve
-The set of factors that cause the demand curve to shift and the set of
the factors that cause the supply curve to shift
-The market equilibrium
-The way the market equilibrium changes when the supply curve or demand curve shifts.
find more resources at oneclass.com
find more resources at oneclass.com
Micro
Part C — Matching Definitions (15%)
Externalities: External Costs and Benefits
Marginal External Cost (MEC): An uncompensated cost that an individual or firm imposes on
others.
Marginal External Benefit (MEB): A benefit that an individual or firm confers on others without
receiving compensation.
Marginal Private Benefit (MPB): The additional benefit the polluter receives from producing
another unit of pollution
Negative Externality: Also known as external costs.
Positive Externalities: Also known as external benefits
Internalize the Externality: When individuals take external costs or benefits into account.
Emissions Tax: A tax that depends on the amount of pollution a iim produces.
Transaction Costs: The costs to individuals of making a deal.
Coase Theorem: This states that even in the presence of externalities an economy can always
reach an efficient solution given that transaction costs are sufficiently low.
Pigouvian Tax: These are designed to reduce external costs.
Pigouvian Subsidy: A payment designed to encourage actives that yeild external benefits.
Technology Spillover: An external benefit that results when knowledge spreads among
individuals and firms.
Environmental Standards: Rules that protect the environment by specifying nations by
producers and consumers.
Marginal Social Benefit Of Pollution(MSB): The addition gain to society as a whole from an
additional unit of pollution. MSB = MPB + MEB
Marginal Social Cost of Pollution (MSC): The addition cost imposed on society as a whole by
additional unit of pollution. MSC = MPC + MEC
Marginal Private Cost of Pollution (MPC): is the additional cost imposed on the polluter if the
polluter creates another unit of pollution.
Tradable Emissions Permits: Licenses to emIt limits quantities of pollutants that can be bought
and sold by polluters.
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
This concept also shows surplus and shortages, overall showing how much of a product is demanded or deemed necessary. 5 key concepts of the supply and demand curve . The set of factors that cause the demand curve to shift and the set of the factors that cause the supply curve to shift. The way the market equilibrium changes when the supply curve or demand curve shifts. Marginal external cost (mec): an uncompensated cost that an individual or rm imposes on others. Marginal external bene t (meb): a bene t that an individual or rm confers on others without receiving compensation. Marginal private bene t (mpb): the additional bene t the polluter receives from producing another unit of pollution. Internalize the externality: when individuals take external costs or bene ts into account. Emissions tax: a tax that depends on the amount of pollution a iim produces. Transaction costs: the costs to individuals of making a deal.
