Unit 6 Flashcards Preview

AP Microeconomics > Unit 6 > Flashcards

Flashcards in Unit 6 Deck (60):
1

private good

not produced by gov
1. Rivalry
2. Excludability

2

public good

produced by gov
1. non-rivalry
2. non-excludability

3

effciency losses in public goods

MB>MC

4

quasi-public goods

underproduced by private sector, benefit beyond individulal buyers (education, police, etc)

5

gov expenditure

1. purchases (exhaustive)
2. transfer payments

6

transfer payments

nonexhuastive (don't create, SS or welfare)

7

propietary income

lottery, tolls

8

spending

1. pensions
2. defense
3. healthcare
4. interest

9

revenue

1. personal income tax
2. Corporate tax
3. payroll tax
4. sales + excise tax

10

deductions

donations, mortage, etc
*marg tax rate is highest paid > find AVG tax rate

11

corporate tax

on profit, old (35%) v new(20-25%), progressive

12

payroll tax

taken out of paycheck, regressive

13

FICA

social security+medicare, proportional

14

sales/excise tax

sin tax, proportional

15

tax burden

1. benefits recieved principle
2. ability to pay principle

16

benefits recieved principle

use service, pay taxes to finance
probs:
1. how gov determine benefits?
2. can't apply to certain programs

17

ability to pay principle

based on income, how much afforded

18

progressive

income increase, % rate increase (personal income tax)

19

regressive

rate decreases as income increases (sales tax, payroll, property)

20

proportional

same for all (sales, corporate)

21

tax incidence

degree to which tax falls on person

22

tax elasiticty

more demand inelestic = more tax shifted to consumer
elastic = seller takes on

23

effciency loss

DWL, society sacrifice net benefits, greater elasticity=great loss
- taxes may have=revenue not social cost

24

minimize effciency loss

redistributive goals:
1. taxes redristribute income
2. reduce negative externalities

25

anti-trust laws

1. Sherman Antitrust act
2. Clayton antitrust act
3. Federal trade commison act
4. Wheeler lea act
5. Celler-Kefauver act

26

sherman antitrust act

fixing prices, vague, won 1 case

27

clayton antitrust act

fix sherman
a) outlaw price discrimination
b)prohibit tying contract
c) eliminate interlocking directorates

28

federal trade commission act

send cease orders

29

wheeler lea act

stop false advertising

30

Celler-Kefauver act

limits mergers

31

court interpretations

a) policy on monopolist be behavior/structuralist?
b)how should markets be defined?

32

structuralist

#'s, too high market share=regulate

33

behavorialist

if serves society, allow

34

rule of reason

size doesn't matter, look at intent, carnegie

35

90-60-30 theory

90 are, 60 prob, 30 no
loop hole - Du pont cellophane

36

2 perspectives of gov involvement

1. active anti-trust
2. laissez faire (market corrects it)

37

3 types of mergers

horizontal, vertical, conglomerate

38

horizontal merger

2 comp of same field

39

vertical merger

buys manufacturing process

40

conglomerate

owns businesses in mult. fields

41

free rider

benefits but no contribution, demand down

42

price fixing

collusion, per se violation (fines)

43

other anti-trust activities

1. mergers
2. price fixing
3. price discrimination
4. tyingn contract

44

tying contract

to get a, must buy b

45

income inequality cause

1. ability
2. education+training
3. discrimination
4. preference+risks
5. unequal distribution of wealth
6. market power
7. luck/connections/misfortunes

46

quintile/lorenz curve

Gini ratio 0(equality) - 1(inequality)
problems:
1. income mobility
2. gov. redistribution of income

47

growth of income inequality

why?
a. demand of high skill workers
b. demographic change
c. trade/immigration

48

equality efficiency trade-off

more income equality comes at cost of lost production/income

49

accuracy of poverty #'s

1. cities (high cost of living)
2. income v consumption

50

entiltlements

transfer payments, us income maintenance system

51

social insurance

partially replace lost earnings
i. social security
ii. medicare
iii. unemployment

52

public assistance

unable to earn income/have dependents
i. supplemental security income (can't get SS)
ii. temporary assistance for needy families (welfare)
iii. SNAP
iv. Medicaid (people on SSI or TANF)

53

trade deficit

import greater than export (china)

54

trade surplus

export greater than import (canada)

55

3 types of goods

1. labor intensive
2. land intensive
3. capital intensive

56

absolute advantage

who produces better

57

comparative advantage

who gives up the least

58

terms of trade

whats traded to get what you want

59

avg tax %

avg tax%= tax/income

60

marginal tax %

highest paid