chapter 5

Question 1

specialization

Answer 1

making the best use of our limited resources by doing the things we are best at and hiring other people to do the things we’re not particulary good at

Question 2

producer surplus

Answer 2

the amount a seller receives for a good or service beyond the minimum he or she would be willing to pay for a good or service less the price he or she actually pays

Question 3

cooperative surplus

Answer 3

the sum of all the net benefits received by the parties to a transaction

Question 4

tax

Answer 4

a compulsory payment to the government that is generally linked to engaging in some activity

Question 5

deadweight loss

Answer 5

surplus value that is lost because something is keeping the market from functioning as well as it can

Question 6

rent seeking

Answer 6

attempting to influence the law for your own private economic advantage

Question 7

black market

Answer 7

a market where goods are sold in violation of governmentally imposed restrictions

Question 8

subsidy

Answer 8

a payment that a person receives from the government for engaging in a particular activity

Question 9

protectionism

Answer 9

governments protecting domestic producers from foreign competition by restricting the ability of foreigners to sell their products in domestic markets

Question 10

tariffs

Answer 10

taxes the government imposes on imported products

Question 11

imports

Answer 11

products produced in a foreign country and sold domestically

Question 12

exports

Answer 12

products produced domestically and sold in foreign countries

Question 13

quota

Answer 13

a limit on the number of imported goods allowed into the country

Question 14

world trade organization

Answer 14

an international organization dedicated to reducing trade barriers between its member nations