ag econ test one study guide

ag econ test one study guide - change in demand - changes...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
ceteris paribus - all other things constant price consumption curve - line that joins all lines in a price change of product demand curve - shoes inverse relationship betwwen the price of a commodity and the amount of the commodity consumed. change in income - prices are held fixed and income is varied normal goods - goods which a rise/fall in income will lead to increased consumption inferior goods - goods which a rise/fall in income will lead decreased consumption engel curve - curve relating income to consumption of a good engel's law - income increases the proportion of income spend on food decreases changes in other prices - if prices of commodity increases or decreases market demand curve - horizontal summation of the two individuals demand curve change in quantity demanded - change expenditures because the price of the product changes
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: change in demand - changes inc consumer income will cause the demand curbe to shift consumer surplus is the right triangle of a curve perfectly inelastic curve is vertical prefectly elastic curve is horizontal calculation of elasticity (Qa-Qb) / ([Qa+Qb] / 2) (Pa-Pb) / ([Pa+Pb] / 2 formula above measures arc elasticity if greater than one elastic (greater than percentage change in price) if own-price elasticity equal to one unitary elastic (same as percentage change in price) less than one inelastic (less than percentage change in price) marginal rate of subsitution (MRS) MRS is always negative net income = income minus expenses equity - assets minus liabilities came up with concept of price elasticity...
View Full Document

This note was uploaded on 03/25/2008 for the course AGEC 101 taught by Professor Capps during the Spring '08 term at Texas A&M.

Page1 / 2

ag econ test one study guide - change in demand - changes...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online