Chapter 7 Microeconomics Exam 3 Flashcards Preview

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Flashcards in Chapter 7 Microeconomics Exam 3 Deck (20):
1

What is an example of an Externalitie

A factory pollutes a lake
This is a negative externality for swimmers
because they have no control over the factory

2

Cost

What the seller gives up to produce a good

3

What 3 things does the amount of deadweight loss depend on?

Price elasticity of demand
Price elasticity of supply
Amount of tax per unit

4

Equality

Spreading prosperity uniformly

5

Consumer Surplus Calculation

buyers willingness to pay minus the market price

6

Willingness to Pay

Maximum amount a buyer wants to pay

7

What are 2 examples of market failure

Market Power
Externalities

8

Consumer surplus

Benefits consumers gain from participating in the market

9

Efficiency

Maximizing surplus

10

Welfare Economics

The affects of allocating resources for others well being

11

Dead Weight Loss

Total surplus that results from tax

12

Producer Surplus Calculation

Market price minus the cost of production

13

What is the tax revenue formula?

Tax per unit x Quantity

14

Where is the market price on the graph?

The equilibrium (where supply and demand meet)

15

Demand is the same as

Marginal Benieft

16

What does producer surplus measures?

Benefits that sellers get when participating in a market

17

When price falls consumer surplus...

Increases

18

Willingness to sell is another word for ----- ----.

Marginal cost

19

Supply is the same as

Marginal cost

20

Willingness to Pay is another word for ---- ----.

Marginal benieft

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