unit 5

Question 1

power

Answer 1

the ability to do (and get) the things one wants in opposition to the intentions of others, ordinarily by imposing or threatening sanctions.

Question 2

Bargaining power

Answer 2

The extent of a person’s advantage in securing a larger share of the economic rents made possible by an interaction.

Question 3

Allocation

Answer 3

a description of who does what, the consequences of their actions, and who gets what as a result.

Question 4

1. Pareto criterion
2. Pareto domination
3. Pareto improvement

Answer 4

1. a desirable attribute of an allocation is that it be Pareto-efficient.
2. allocation A pareto dominates allocation B if at least one person would be better off with A than B, and nobody would be worst off
3. a change that benefits at least one person without making anyone worst off

Question 5

1. Pareto efficiency
2. Pareto efficiency curve

Answer 5

1. An allocation with the property that there is no alternative technically feasible allocation in which at least one person would be better off, and nobody worse off.
2. The set of all allocations that are Pareto efficient.

Question 6

concepts of fairness
1. Substantive
2. procedural

Answer 6

1. judgements based on the characteristics of the action itself
2. an evaluation of the outcome on how it came about

Question 7

Economic rent (compared to land rent)

Answer 7

payment or other benefit received above and beyond what the individual would have received in his or her next best alternative

Question 8

Joint surplus

Answer 8

the sum of economic rents of all involved in an interaction

Question 9

1. Lorenz curve
2. Gini coefficient

Answer 9

1. A graphical representation of inequality of some quantity such as wealth or income. the extent of inequality and allows comparison of distribution
2. A measure of inequality of any quantity such as income or wealth, varying from a value of zero (if there is no inequality) to one (if a single individual receives all of it).