econ final

Question 1

profit maximizing point

Answer 1

MC=MR

Question 1

Normal profit

Answer 1

atc intersects demand

Question 2

shut down point

Answer 2

Price (MR) falls below AVC

Question 3

changes in QD< changes in price

Answer 3

inelastic

Question 4

inelastic

Answer 4

PED<1

Question 5

Complements

Answer 5

Cross price elasticity <1

Question 6

cross price elasticity (XED)

Answer 6

%change in Qd A/ % change price B

Question 7

Income elasticity demand

Answer 7

%change in Qd/ % change income

Question 8

economically efficient point

Answer 8

price=MC (demand curve)

Question 9

normal good

Answer 9

income elasticity of demand>1

Question 10

pigovian taxes

Answer 10

correct negative externalities by making firms pay for the damage they cause.

Question 11

implicit costs

Answer 11

non monetary cost opportunity

Question 12

accounting profit

Answer 12

TR-explicit costs

Question 13

economic profit

Answer 13

TR - (explicit+implicit costs)

Question 14

TVC

Answer 14

wage x total workers

Question 15

monopolistic competition

Answer 15

many small firms, differentiated, easy to enter (blue jeans- large initial entry costs)

Question 16

monopoly

Answer 16

unique product, single large firm, entry blocked

Question 17

oligopoly

Answer 17

few and large, product differentiation, hard to enter (ex beer)

Question 18

invisible hand

Answer 18

self interested individuals driven by self interest benefit society as a whole

Question 19

break even price

Answer 19

total cost/output

Question 20

invisible hand properties

Answer 20

p=mc is minimization of total industry costs ; entry & exit result in best use of limited resources

Question 21

price controls can

Answer 21

redistribute income, affect quality, cause queuing, cause discrimination

Question 22

social cost

Answer 22

private cost and external cost

Question 23

moral hazard (asymmetric info)

Answer 23

after transaction. Knowing they have insurance makes them take more risks.

Question 24

Adverse selection (asymmetric info)

Answer 24

before transaction. people with driving dangers more likely to get insurance.

Question 25

principal agent problem (asymmetric info)

Answer 25

workers interests and actions may not align with the rules.

Question 26

limitations to coase theorem (clear property rights and low transaction costs= priv parties solution to externalities without gov)

Answer 26

coordination issues, bargaining breaks down, high transaction costs

Question 27

2 ways to control monopoly

Answer 27

regulation and anti trust laws (sherman act)

Question 28

consumer surplus measures

Answer 28

net benefit of participating in the market

Question 29

pig tax

Answer 29

mpb-msb at socially optimal cost

Question 30

command control approach

Answer 30

govn sets standard and enforces it with a penalty

Question 31

coase theorem

Answer 31

parties can bargain without using cost on allocation of resources on their own , they can solve externalities on their own too

Question 32

solution to negative externalities

Answer 32

corrective taxes

Question 33

gov reaction to positive externalities

Answer 33

subsidies

Question 34

club good

Answer 34

excludable, not rival

Question 35

common good

Answer 35

not excludable, rival

Question 36

average fixed cost

Answer 36

fixed cost/output

Question 37

marginal cost

Answer 37

change in cost/change in quantity

Question 38

fixed costs are ___ run; variable are ___ run.

Answer 38

short, long

Question 39

price < AVC

Answer 39

SHUT DOWN

Question 40

profit

Answer 40

(p-atc) x Q

Question 41

monopolies marginal revenues lower than costs

Answer 41

monopolies face downward sloping curve

Question 42

for normal good income effect reinforces

Answer 42

substitution effect

Question 43

normal profit

Answer 43

atc intersects demand

Question 44

what happened to beer breweries

Answer 44

used economies of scale, refridgeration improvements

Question 45

2 invisible hand properties

Answer 45

allocation of resources is efficient, social benefit when pple are selfish

Question 46

nudging

Answer 46

small changes in how choices presented to influence decisions while perserving freedom of choice- can be seen as manipulative

Question 47

marginal cost

Answer 47

change in cost/change in output

Question 48

profit

Answer 48

(price-atc) x Q

Question 49

perfectly competitive market

Answer 49

demand meets MC

Question 50

monopoly market

Answer 50

MR meets MC

Question 51

joshep schumpter

Answer 51

economy benefitting from firms having market power bc can contribute funds to research and development

Question 52

swords question 40 and 60

Answer 52

20 and 20