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Microeconomics > Exam #2 > Flashcards

Exam #2 Flashcards

1
Q

A maximum price that sellers can charge.

A

Price Ceiling

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2
Q

A price ceiling that prevents the market from reaching the market equilibrium price.

A

Binding price ceiling

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3
Q

A minimum price that sellers can charge

A

Price Floor

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4
Q

A price floor that prevents the market from reaching the equilibrium price.

A

Binding price floor

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5
Q

A minimum or maximum quantity that can be sold

A

Quantity regulation

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6
Q

A requirement to buy or sell a minimum amount of a good

A

Mandate

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7
Q

A limit on the maximum quantity of a good that can be sold

A

Quota

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8
Q

A tax assessed as a percentage of the price of a product

A

Percentage Tax

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9
Q

A tax assessed as a dollar amount, independent of the price of a product.

A

Per-Unit Tax

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10
Q

The total amount of money collected through a tax

A

Tax revenue

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11
Q

The burden created by the change in after-tax prices faced by buyers and sellers

A

Economic Burden

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12
Q

The division of the economic burden of a tax between buyers and sellers

A

Tax Incidence

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13
Q

The burden of being assigned by the government to send a tax payment.

A

Statutory Burden

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14
Q

A payment made by the government to those who make a specific choice.

A

Subsidy

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15
Q

Describes what is happening, explaining why, or predicting what will happen.

A

Positive Analysis

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16
Q

Prescribes what should happen, which involved value judgements

A

Normative Analysis

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17
Q

The total benefits minus total costs flowing from a decision.

A

Economic Surplus

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18
Q

An outcome is more economically efficient if it yields more economic surplus

A

Economic Efficiency

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19
Q

The efficient outcome yields the largest possible economic surplus

A

Efficient Outcome

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20
Q

An outcome yields greater equity if it results in a fairer distribution of economic benefits

A

Equity

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21
Q

Buyers and sellers exchange money of goods only if they both want to

A

Voluntary Exchange

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22
Q

The economic surplus you get from buying something

A

Consumer surplus

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23
Q

The economic surplus you get from selling something

A

Producer Surplus

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24
Q

Allocating goods to create the largest economic surplus, which requires that each good goes to the person who’ll get the highest marginal benefit from it.

A

Efficient Allocation

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25
Q

Producing a given quantity of output at the lowest possible cost, which requires producing each good at the lowest marginal cost.

A

Efficient Production

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26
Q

The quantity that produces the largest possible economic surplus.

A

Efficient Quantity

27
Q

Produce more of a good if its marginal benefit is greater than (or equal to) the marginal cost

A

Rational Rule for Markets

28
Q

When the forces of supply and demand lead to an inefficient outcome

A

Market Failure

29
Q

How far economic surplus falls below the efficient outcome

A

Deadweight loss

30
Q

When the government policies lead to worse outcomes

A

Government Failures

31
Q

Who gets what

A

Distributional consequences

32
Q

The benefits that come from reallocating resources, goods, and services to better uses.

A

Gains from trade

33
Q

The ability to do a task using fewer inputs

A

Absolute advantage

33
Q

The ability to do a task at a lower opportunity cost

A

Comparative advantage

34
Q

Focusing on specific tasks

A

Specialization

34
Q

Markets whose payoffs are linked to whether an uncertain event occurs

A

Prediction markets

35
Q

When knowledge needed to make a good decision is not available to the decision maker.

A

Knowledge problem

36
Q

Markets within a company to buy and sell scarce resources

A

Internal markets

37
Q

A side effect of an activity that affects bystanders whose interests aren’t taken into account

A

Externality

38
Q

The extra cost paid by the from one extra unit

A

Marginal Private Cost

39
Q

A cost imposed on bystanders

A

External Cost

40
Q

The extra external cost imposed on bystanders from one extra unit

A

Marginal External Cost

41
Q

All marginal costs, no matter who pays them, = MPC + MEC

A

Marginal Social Cost

42
Q

An activity whose side effects harm bystanders

A

Negative Externality

43
Q

The outcome that is most efficient for society as a whole, including the interests of buyers, sellers, and bystanders

A

Socially Optimal

44
Q

Produce more of an item if its marginal social benefit is greater than (or equal to) the marginal social cost.

A

Rational Rule for Society

44
Q

An activity whose side effects benefit bystanders

A

Positive externality

45
Q

The extra benefit enjoyed by the buyer from one extra unit

A

Marginal Private Benefit

46
Q

A benefit accruing to bystanders

A

External Benefit

47
Q

The extra external benefit accruing to bystanders from one extra unit

A

Marginal External Benefit

48
Q

All marginal benefits, no matter who gets them; = MPB + MEB

A

Marginal Social Benefit

49
Q

A tax designed to induce people to take account of the negative externalities they cause.

A

Corrective Tax

50
Q

A subsidy designed to induce people to take account of the positive externalities they cause

A

Corrective Subsidy

51
Q

A quantity regulation implemented by allocating a fixed number of permits, which can then be traded.

A

Cap and Trade

52
Q

If bargaining is costless and property rights are clearly established and enforced, then externality problems can solved by private bargains.

A

Coarse Theorem

53
Q

When someone cannot be easily excluded from using something

A

Nonexludable

54
Q

A good for which your use of it comes at someone else’s expense

A

Rival Good

55
Q

A good for which one person’s use doesn’t subtract from another’s.

A

Nonrival Good

56
Q

When someone can enjoy the benefits of a good without bearing the costs.

A

Free-Rider Problem

57
Q

A nontrivial good that is nonexcludable and hence subject to the free-rider problem

A

Public Good

58
Q

A good that is excludable, but nonrival in consumption

A

Club Good

59
Q

A good that is rival and also non excludable

A

Common Resource

60
Q

The tendency to over consume a common resource

A

The Tragedy of the Commons

Microeconomics (4 decks)

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