Principles of Microeconomics — Core flashcards
10 of 80 cards free to study here · 15 topics · the whole deck is built into Willys
A full college principles of microeconomics course: budget constraints, supply and demand algebra, price controls, elasticity, utility and indifference curves, costs, market structures, antitrust, externalities, public choice, labor and inequality, insurance and trade.
Learn deck · part of Principles of Economics (Micro and Macro) · written against: Standard two-course principles sequence; OpenStax Principles of Economics 3e, consulted as a reference; no text copied. Updated 2026-10-10.
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Maya has 60 dollars a month to spend on movie rentals at 4 dollars each and concert tickets at 12 dollars each. What is her budget constraint, and what is the opportunity cost of one concert?4R + 12C = 60, so she can afford at most 15 rentals or 5 concerts. Each concert costs 3 rentals given up — the price ratio 12 ÷ 4.Scarcity and Choice
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Demand is and supply is . A price ceiling of 25 dollars is imposed. How large is the shortage?At P = 25, quantity demanded is 70 and quantity supplied is 45, so the shortage is 25 units. The ceiling binds because it is below the equilibrium price of 30.Price Controls and Surplus
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Why does the midpoint method give the same elasticity whether the price rises or falls?It divides each change by the average of the starting and ending values rather than by the starting value, so going from 4 to 6 and from 6 to 4 both use a base of 5.Elasticity
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A firm's total cost is 50, 80, 100, 130 and 180 dollars at outputs 0 through 4. What are the fixed cost, the marginal cost of the 3rd unit and ATC at 3 units?Fixed cost = 50 dollars (the cost at zero output). MC of the 3rd unit = 130 − 100 = 30 dollars. ATC at 3 units = 130 ÷ 3 ≈ 43.33 dollars.Production and Costs
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A wheat farmer sets her price one cent above the market price. What happens, and why?She sells nothing. In perfect competition buyers can get an identical product from countless other sellers at the market price, so each firm is a price taker.Perfect Competition
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What three broad ways can a firm differentiate its product?By physical features (design, quality), by location (a store close to customers) and by intangible image (branding, perceived status or service).Monopolistic Competition and Oligopoly
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A market has four firms with shares of 40%, 30%, 20% and 10%. What is its Herfindahl–Hirschman Index?Square and add the shares: 1,600 + 900 + 400 + 100 = 3,000, a highly concentrated market. Squaring gives large firms extra weight.Antitrust and Regulation
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Why does a listener-supported public radio station struggle to fund itself through voluntary donations?The broadcast is nonexcludable and nonrival, so each listener can free-ride — enjoying it whether or not they give. Many do, so donations fall short of the value listeners get.Public Goods and Public Choice
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Why do dangerous jobs, such as commercial fishing or tower climbing, tend to pay more than safer jobs requiring similar skills?A compensating wage differential: employers must pay extra to attract workers into unpleasant or risky work. Otherwise workers would choose the safer jobs.Labor Markets and Inequality
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Why does the United States both import and export cars?This is intra-industry trade. Consumers want variety (different brands and models), and economies of scale let each country's plants specialize in a few models and sell them worldwide.International Trade
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Checked against:
- OpenStax Principles of Economics 3e, consulted as a reference; no text copied.
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