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Flashcard 150897477

Tags
#finance #steiner-mastering-financial-calculations-3ed
Question
For interest rate futures, prices are quoted in units of [...]. This minimum movement is called a tick.
Answer
0.005 (half a basis point - mind that "par" price is 100)


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For interest rate futures, prices are quoted in units of 0.005. This minimum movement is called a tick.

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#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
A utility function is of the form utility = U(QA, QB, ... ,QN), where the variables are quantities consumed of goods A through N. We assume that no quantities are negative (some may be zero), and that holding all other quantities constant while increasing one always results in greater utility. This is referred to as the condition of non-satiation.

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Flashcard 150916347

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
A [...] is of the form u = U(QA, QB, ... ,QN), where the variables are quantities consumed of goods A through N. We assume that no quantities are negative (some may be zero), and that holding all other quantities constant while increasing one always results in greater utility.
Answer
utility function


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A utility function is of the form utility = U(Q A , Q B , ... ,Q N ), where the variables are quantities consumed of goods A through N. We assume that no quantities are negative (some may be zero), and tha

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Flashcard 150916356

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
A utility function is of the form utility = U(QA, QB, ... ,QN), where the variables are [...] A through N. We assume that no quantities are negative (some may be zero), and that holding all other quantities constant while increasing one always results in greater utility.
Answer
quantities consumed of goods


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A utility function is of the form utility = U(Q A , Q B , ... ,Q N ), where the variables are quantities consumed of goods A through N. We assume that no quantities are negative (some may be zero), and that holding all other quantities constant while increasing one always results in greater utility.</

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Flashcard 150916365

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
A utility function is of the form utility = U(QA, QB, ... ,QN), where the variables are quantities consumed of goods A through N. We assume that no quantities are negative (some may be zero), and that holding all other quantities constant while increasing one [...] utility.
Answer
always results in greater


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f the form utility = U(Q A , Q B , ... ,Q N ), where the variables are quantities consumed of goods A through N. We assume that no quantities are negative (some may be zero), and that holding all other quantities constant while increasing one <span>always results in greater utility.<span><body><html>

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Flashcard 150916377

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
A utility function is of the form utility = U(QA, QB, ... ,QN), where the variables are quantities consumed of goods A through N. We assume that no quantities are negative (some may be zero), and that holding all other quantities constant while increasing one always results in greater utility. This is referred to as the condition of [...].
Answer
non-satiation (all other things being equal, more is better than less)


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tities consumed of goods A through N. We assume that no quantities are negative (some may be zero), and that holding all other quantities constant while increasing one always results in greater utility. This is referred to as the condition of <span>non-satiation.<span><body><html>

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Flashcard 150916386

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
Utility is an ordinal measure, rather than a cardinal measure. What does it mean?
Answer
We can say which bundle is more satisfying (order of bundles), but we cannot say by how much.


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#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Indifference curves plot the combinations of two goods that provide equal utility to a consumer.

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Flashcard 150916399

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
Indifference curves plot the combinations of two goods that provide equal [...] to a consumer.
Answer
utility


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Indifference curves plot the combinations of two goods that provide equal utility to a consumer.

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#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Indifference curves for two goods slope downward: A bundle of goods with less of Good X must have more of GoodY for the two to have equal utility and lie on the same indifference curve.

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Flashcard 150916409

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
Indifference curves for two goods slope [downward or upward?]: A bundle of goods with less of Good X must have more of GoodY for the two to have equal utility and lie on the same indifference curve.
Answer
downward


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Indifference curves for two goods slope downward: A bundle of goods with less of Good X must have more of GoodY for the two to have equal utility and lie on the same indifference curve.

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Flashcard 150916418

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
Indifference curves for two goods slope downward: A bundle of goods with less of Good X must have [less or more?] of GoodY for the two to have equal utility and lie on the same indifference curve.
Answer
more


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Indifference curves for two goods slope downward: A bundle of goods with less of Good X must have more of GoodY for the two to have equal utility and lie on the same indifference curve.

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Flashcard 150916427

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
Indifference curves for two goods slope downward: A bundle of goods with less of Good X must have more of GoodY for the two to have equal [...] and lie on the same indifference curve.
Answer
utility


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Indifference curves for two goods slope downward: A bundle of goods with less of Good X must have more of GoodY for the two to have equal utility and lie on the same indifference curve.

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Flashcard 150916433

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
Indifference curves for two goods slope downward: A bundle of goods with less of Good X must have more of GoodY for the two to have [...] utility and lie on the same indifference curve.
Answer
equal


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Indifference curves for two goods slope downward: A bundle of goods with less of Good X must have more of GoodY for the two to have equal utility and lie on the same indifference curve.

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#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Indifference curves are convex towards the origin: Convexity results when the magnitude of the slope decreases as we move toward more of Good X and less of GoodY.

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Flashcard 150916443

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
Indifference curves are [convex/concave] towards the origin: Convexity results when the magnitude of the slope decreases as we move toward more of Good X and less of GoodY.
Answer
convex


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Indifference curves are convex towards the origin: Convexity results when the magnitude of the slope decreases as we move toward more of Good X and less of GoodY.

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Flashcard 150916452

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
Indifference curves are convex [towards/away from] the origin: Convexity results when the magnitude of the slope decreases as we move toward more of Good X and less of GoodY.
Answer
towards


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Indifference curves are convex towards the origin: Convexity results when the magnitude of the slope decreases as we move toward more of Good X and less of GoodY.

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Flashcard 150916461

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
Indifference curves are convex towards the origin: Convexity results when the magnitude of the slope [increases/decreases] as we move toward more of Good X and less of GoodY.
Answer
decreases


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Indifference curves are convex towards the origin: Convexity results when the magnitude of the slope decreases as we move toward more of Good X and less of GoodY.

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#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
The slope of an indifference curve at any point is referred to as the marginal rate of substitution (MRS), the rate at which the consumer will willingly exchange units of Good X for units of Good Y.

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Flashcard 150916474

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
The slope of an indifference curve at any point is referred to as the [...], the rate at which the consumer will willingly exchange units of Good X for units of Good Y.
Answer
marginal rate of substitution (MRS)


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The slope of an indifference curve at any point is referred to as the marginal rate of substitution (MRS), the rate at which the consumer will willingly exchange units of Good X for units of Good Y.

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#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
The characteristic convexity of indifference curves towards the origin reflects a diminishing marginal rate of substitution.

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Flashcard 150916487

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
The characteristic convexity of indifference curves towards the origin reflects a [...] marginal rate of substitution.
Answer
diminishing


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The characteristic convexity of indifference curves towards the origin reflects a diminishing marginal rate of substitution.

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Flashcard 150916493

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
The characteristic convexity of indifference curves towards the origin reflects a diminishing [...].
Answer
marginal rate of substitution


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The characteristic convexity of indifference curves towards the origin reflects a diminishing marginal rate of substitution.

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Flashcard 150916499

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
Can indifference curves cross?
Answer
No.


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#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
we represent a consumer 's equilibrium bundle of goods, the most preferred affordable combination of Good X and GoodY, as the point where the highest attainable indifference curve is just tangent to the budget line.

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Flashcard 150916512

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
we represent a consumer 's [...], the most preferred affordable combination of Good X and GoodY, as the point where the highest attainable indifference curve is just tangent to the budget line.
Answer
equilibrium bundle of goods


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we represent a consumer 's equilibrium bundle of goods, the most preferred affordable combination of Good X and GoodY, as the point where the highest attainable indifference curve is just tangent to the budget line.</spa

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Flashcard 150916518

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
we represent a consumer 's equilibrium bundle of goods, the most preferred affordable combination of Good X and GoodY, as the point where the [...] is just tangent to the budget line.
Answer
highest attainable indifference curve


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we represent a consumer 's equilibrium bundle of goods, the most preferred affordable combination of Good X and GoodY, as the point where the highest attainable indifference curve is just tangent to the budget line.

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Flashcard 150916524

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
we represent a consumer 's equilibrium bundle of goods, the most preferred affordable combination of Good X and GoodY, as the point where the highest attainable indifference curve is just [...] to the budget line.
Answer
tangent


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>we represent a consumer 's equilibrium bundle of goods, the most preferred affordable combination of Good X and GoodY, as the point where the highest attainable indifference curve is just tangent to the budget line.<html>

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Flashcard 150916530

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
we represent a consumer 's equilibrium bundle of goods, the most preferred affordable combination of Good X and GoodY, as the point where the highest attainable indifference curve is just tangent to the [...].
Answer
budget (constraint) line


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dy>we represent a consumer 's equilibrium bundle of goods, the most preferred affordable combination of Good X and GoodY, as the point where the highest attainable indifference curve is just tangent to the budget line.<body><html>

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#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
When the price of Good X decreases, there is a substitution effect that shifts consumption towards more of Good X.

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Flashcard 150916549

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
When the price of Good X decreases, there is a substitution effect that shifts consumption towards [...] of Good X.
Answer
more


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When the price of Good X decreases, there is a substitution effect that shifts consumption towards more of Good X.

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#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Because the total expenditure on the consumer's original bundle of goods falls when the price of Good X falls, there is also an income effect.

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Flashcard 150916562

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
Because the total expenditure on the consumer's [...] bundle of goods falls when the price of Good X falls, there is also an income effect.
Answer
original


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Because the total expenditure on the consumer's original bundle of goods falls when the price of Good X falls, there is also an income effect .

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Flashcard 150916568

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
Because the total expenditure on the consumer's original bundle of goods falls when the price of Good X falls, there is also [...].
Answer
an income effect


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Because the total expenditure on the consumer's original bundle of goods falls when the price of Good X falls, there is also an income effect .

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#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
the income effect can either increase or decrease consumption of a good that has fallen in price

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Flashcard 150916581

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
the income effect [increases/decreases] consumption of a good that has fallen in price
Answer
can either increase or decrease


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the income effect can either increase or decrease consumption of a good that has fallen in price

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#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
the substitution effect always increases the consumption of a good that has fallen in price.

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Flashcard 150916597

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
the substitution effect [increases/decreases] the consumption of a good that has fallen in price.
Answer
always increases


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the substitution effect always increases the consumption of a good that has fallen in price.

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#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
The substitution effect is positive, and the income effect is also positive- consumption of Good X will increase.

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Flashcard 150916610

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
The substitution effect is positive, and the income effect is also positive- consumption of Good X will [...].
Answer
increase


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The substitution effect is positive, and the income effect is also positive- consumption of Good X will increase.

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#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
The substitution effect is positive, and the income effect is negative but smaller than the substitution effect-consumption of Good X will increase.

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Flashcard 150916620

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
The substitution effect is positive, and the income effect is negative but smaller than the substitution effect-consumption of Good X will [...].
Answer
increase


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The substitution effect is positive, and the income effect is negative but smaller than the substitution effect-consumption of Good X will increase.

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#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
The substitution effect is positive, and the income effect is negative and larger than the substitution effect-consumption of Good X will decrease. These kind of goods are called Giffen goods and they are clearly inferior goods.

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Flashcard 150916630

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
The substitution effect is positive, and the income effect is negative and larger than the substitution effect-consumption of Good X will [...]
Answer
decrease


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The substitution effect is positive, and the income effect is negative and larger than the substitution effect-consumption of Good X will decrease

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#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
A Veblen good is one for which a higher price makes the good more desirable.

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Flashcard 150916640

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
A [...] good is one for which a higher price makes the good more desirable.
Answer
Veblen


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A Veblen good is one for which a higher price makes the good more desirable.

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Flashcard 150916646

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
A Veblen good is one for which a higher price makes the good [less or more?] desirable.
Answer
more


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A Veblen good is one for which a higher price makes the good more desirable.

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#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
A normal good is one for which the income effect is positive

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Flashcard 150916659

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#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
A normal good is one for which the income effect is [...]
Answer
positive


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A normal good is one for which the income effect is positive

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Flashcard 150916668

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#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
The substitution effect is positive, and the income effect is negative and larger than the substitution effect-consumption of Good X will decrease. These kind of goods are called [...] goods and they are clearly inferior goods.
Answer
Giffen


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The substitution effect is positive, and the income effect is negative and larger than the substitution effect-consumption of Good X will decrease. These kind of goods are called Giffen goods and they are clearly inferior goods.

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Flashcard 150916674

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
The substitution effect is positive, and the income effect is negative and larger than the substitution effect-consumption of Good X will decrease. These kind of goods are called Giffen goods and they are clearly [normal or inferior?] goods.
Answer
inferior


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head><head>The substitution effect is positive, and the income effect is negative and larger than the substitution effect-consumption of Good X will decrease. These kind of goods are called Giffen goods and they are clearly inferior goods.<html>

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Flashcard 150916683

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
Existence of which goods is described by rules of consumer choice (indifference function, budget constraint line): Veblen or Giffen?
Answer
Giffen (the inferior ones); Veblen goods like Gucci bags are not described by these rules of consumer choice.


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#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
A decrease in the price of a good that a consumer purchases leaves her with unspent income (for the same combination of goods). The effect of this additional income on consumption of the good for which the price has decreased is termed the income effect.

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Flashcard 150916699

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
A decrease in the price of a good that a consumer purchases leaves her with unspent income (for the same combination of goods). The effect of this additional income on consumption of the good for which the price has decreased is termed [...].
Answer
the income effect


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>A decrease in the price of a good that a consumer purchases leaves her with unspent income (for the same combination of goods). The effect of this additional income on consumption of the good for which the price has decreased is termed the income effect.<span><body><html>

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#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
accounting profit = total revenue- total accounting (explicit) costs

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Flashcard 150916709

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
[...] = total revenue- total accounting (explicit) costs
Answer
accounting profit


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accounting profit = total revenue- total accounting (explicit) costs

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Flashcard 150916715

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
accounting profit = [...]- total accounting (explicit) costs
Answer
total revenue


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accounting profit = total revenue- total accounting (explicit) costs

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Flashcard 150916721

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
accounting profit = total revenue- [...]
Answer
total accounting (explicit) costs


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accounting profit = total revenue- total accounting (explicit) costs

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#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Accounting profit may be referred to as net income, net profit, net earnings, or the bottom line (of the firm's income statement).

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Flashcard 150916734

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
[...] may be referred to as net income, net profit, net earnings, or the bottom line (of the firm's income statement).
Answer
Accounting profit


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Accounting profit may be referred to as net income, net profit, net earnings, or the bottom line (of the firm's income statement).

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Flashcard 150916740

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
Accounting profit may be referred to as net income, net profit, net earnings, or [...] (of the firm's income statement).
Answer
the bottom line


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Accounting profit may be referred to as net income, net profit, net earnings, or the bottom line (of the firm's income statement).

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#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Accounting costs are explicit costs that represent actual payments for the resources the firm uses in producing its output .

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Flashcard 150916750

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
Accounting costs are [...] costs that represent [...] payments for the resources the firm uses in producing its output .
Answer
explicit costs that represent actual payments


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Accounting costs are explicit costs that represent actual payments for the resources the firm uses in producing its output .

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Flashcard 150916759

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
Do accounting costs include the interest cost on debt financing?
Answer
Yes.


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Flashcard 150916768

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
Do accounting costs include payments to the firm's equity owners as a return on their invested capital?
Answer
No.


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#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Economic profit is also referred to as abnormal profit.

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Flashcard 150916781

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
[...] profit is also referred to as abnormal profit.
Answer
Economic


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Economic profit is also referred to as abnormal profit.

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Flashcard 150916787

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
Economic profit is also referred to as [...] profit.
Answer
abnormal


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Economic profit is also referred to as abnormal profit.

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#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
economic (abnormal) profit = accounting profit - implicit opportunity costs

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Flashcard 150916800

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
[...] = accounting profit - implicit opportunity costs
Answer
economic (abnormal) profit


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economic (abnormal) profit = accounting profit - implicit opportunity costs

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Flashcard 150916806

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
economic (abnormal) profit = [...] - implicit opportunity costs
Answer
accounting profit


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economic (abnormal) profit = accounting profit - implicit opportunity costs

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Flashcard 150916812

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
economic (abnormal) profit = accounting profit - [...]
Answer
implicit opportunity costs


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economic (abnormal) profit = accounting profit - implicit opportunity costs

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#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
economic (abnormal) profit = total revenue - total economic costs

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Flashcard 150916825

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
[...] = total revenue - total economic costs
Answer
economic (abnormal) profit


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economic (abnormal) profit = total revenue - total economic costs

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Flashcard 150916831

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
economic (abnormal) profit = [...] - total economic costs
Answer
total revenue


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economic (abnormal) profit = total revenue - total economic costs

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Flashcard 150916837

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
economic (abnormal) profit = total revenue - [...]
Answer
total economic costs
which means explicit (aka accounting) cost + implicit cost


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economic (abnormal) profit = total revenue - total economic costs

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#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
For publicly traded firms, implicit costs are typically only the opportunity cost of equity owners' investment in the firm.

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Flashcard 150916847

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
For publicly traded firms, implicit costs are typically only [...].
Answer
the opportunity cost of equity owners' investment in the firm


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For publicly traded firms, implicit costs are typically only the opportunity cost of equity owners' investment in the firm.

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#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Implicit costs are the opportunity costs of resources supplied to the firm by its owners.

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Flashcard 150916857

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
Implicit costs are the [...] of resources supplied to the firm by its owners.
Answer
opportunity costs


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Implicit costs are the opportunity costs of resources supplied to the firm by its owners.

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#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
For private firms, the implicit costs may include the opportunity cost of owner- supplied capital and the opportunity cost of the time and entrepreneurial ability of the firm's owners.

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Flashcard 150916870

Tags
#2015 #book-2 #cfa #cfa-level-1 #economics #schweser
Question
For private firms, the implicit costs may include the opportunity cost of owner- supplied capital and the opportunity cost of the [...] of the firm's owners.
Answer
time and entrepreneurial ability


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For private firms, the implicit costs may include the opportunity cost of owner- supplied capital and the opportunity cost of the time and entrepreneurial ability of the firm's owners.

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