Workbook12

Question 1

Normative Ambiguity

Answer 1

Two tenets (maxis or principles) of social behavior suggest counter-directional outcomes when applied arbitrarily to the same set of circumstances

Question 2

O’Brien’s Law

Answer 2

Capt. Murphy was an optimist

Question 3

Oligopoly

Answer 3

A few sellers

Question 4

Oligopsony

Answer 4

A few buyers

Question 5

Opportunity Cost

Answer 5

1: The profit that is not made in the best opportunity foregone, 2: What you would have made in the best thing you did not do.

Question 6

Ordinal Numbers

Answer 6

Numbers that assign rank; e.g., first, second, tenth. (See cardinal numbers)

Question 7

OSHA

Answer 7

Occupational Safety and Health Administration

Question 8

Output

Answer 8

A good or service ready to sell.

Question 9

Pareto Optimality

Answer 9

The condition that exists when no one can be made better off without making someone worse off. (See income redistribution)

Question 10

Parkinson’s Law

Answer 10

A book by British historian Cyril Northcote Parkinson that explains how work expands to dill the time available for its completion

Question 11

Peak-Load Pricing

Answer 11

A legal form of price discrimination whereby buyers pay more during peeks of high demand; e.g., airlines, telephones.

Question 12

Perfect Competition

Answer 12

Alfred Marshall’s theory of markets demonstrating that an economy will eventually optimize the use of its scarce productive resources if no single firm can significantly affect the market price, goods are standardized, and there are no artificial barriers to trade

Question 13

Perfectionist

Answer 13

What someone who doesn’t care calls someone who does.

Question 14

Peter Principle

Answer 14

A book by Laurence J. Peter that explains how every employee tends to rise to his level of incompetence; e.g., the Buffalo Bills in the Super Bowl

Question 15

Physiocracy

Answer 15

The school of economic thought which holds that agriculture is the source of all real growth, productivity, and wealth. (See Francois Quesnay in Note on Intelligence Heritage)

Question 16

Point of Diminishing Returns

Answer 16

The minimum point on the marginal cost function. The inflection point on the total cost or variable cost function. The benchmark beyond which a business much go to maximize profits. (See law of diminishing returns)

Question 17

Positive-Sum Game

Answer 17

1: Any competitive activity where, regardless of individual gains or losses, the group of participants, taken as collective, is better off, 2: When a rising tide raises all ships.

Question 18

Preliminary Injunction

Answer 18

An order that may be issued at the outset of a case if they judge believes that the prima facie evidence is substantially valid and that the plaintiff will ultimately prevail against the defendant, thereby resulting in a permanent injunction

Question 19

Price Discrimination

Answer 19

The act of inducing different buyers to pay different prices for the same good.

Question 20

Price Fixing

Answer 20

The elimination of price competition through illegal collusion, regulated monopolies, or government permitted “fair trade” pricing. (See collusion)

Question 21

Price Maker

Answer 21

The buyer if demand is totally elastic (e.g., wheat) or supply is totally inelastic (e.g., a rare painting); the seller id supply is totally elastic (e.g., paper clips) or demand is totally inelastic (e.g., salt). (See price taker)

Question 22

Price Taker

Answer 22

The buyer if demand is totally inelastic or supply is totally elastic; the seller if supply is totally inelastic or demand is totally elastic. (See price maker)

Question 23

Prima Facie

Answer 23

(Latin) At first view; so far as it appears)

Question 24

Private Property Rights

Answer 24

Exclusive use and transfer. Adam Smith argued that government should restrict its economic activity to the production of these rights; i.e., by providing an army, police, and judicial enforcement. (See laissez faire)

Question 25

Pro-Cyclical

Answer 25

Any market behavior that drives the price away from the trend line or moving average. Buying or selling that destabilizes the market by exaggerating the vagaries of the cycle. (See anti-cyclical)

Question 26

Pro-Prosperity Tenet

Answer 26

A maxim or life principle, if followed, that would result in material well-being. The opposite of an anti-prosperity tenet that would have detrimental economic consequences.

Question 27

Producer Line

Answer 27

The marginal cost function; i.e., the minimum price the seller can charge and still cover the marginal cost.

Question 28

Production Possibilities Curve

Answer 28

The frontier line of maximum output possible when all available factors of production are fully employed at their highest and best use; i.e., when all good and services are produced at the minimum average cost

Question 29

Production vs. Productivity

Answer 29

Production is output. Productivity is output per unit of input. For example, 100 finished widgets represented production; 20 widgets per worker reflect productivity.

Question 30

Productivity Descriptions

Answer 30

Six possible outcomes from a change in production: 1: Increasing returns to scale; 2: Constant returns to scale; 3: Decreasing returns to scale; 4: Increasing returns to the variable factor; 5: Constant returns to the variable factor; and 6: Decreasing returns to the variable factor. (See diminishing return)

Question 31

Profit Maximization Point

Answer 31

When marginal costs (MC) equals marginal revenue (MR

Question 32

Profit Theory

Answer 32

Any model that explains how a business enterprise maximizes profit. (See theory of the firm).

Question 33

Proprietorship

Answer 33

A business organization that operates as a DBA (doing business as) for the owner(s) who are personally responsible for all taxes and liabilities

Question 34

Quasi Rent

Answer 34

A premium in excess of economic rent paid to a factor of production which is experiencing abnormal scarcity. (See economic rent)

Question 35

Quid Pro Quo

Answer 35

A trade restriction which protects a domestic producer by limiting the amount of a particular good that that may be imported from a specific foreign nation.

Question 36

Rate of Increase

Answer 36

The percentage change between two numbers: take the first number from the second number, divide the difference by the first number, and multiply the quotient by 100. For example, the rate of increase from 4 to 5 is 25%; i.e., 5-4=1/4=/25=25%. (See arithmetic progression and geometric progression)

Question 37

Rationality

Answer 37

The assumption in ordinal utility theory that more is preferred to less.

Question 38

Real Transfer vs. Money Transfer

Answer 38

Real refers to the good or service in a transaction, as opposed to money which is the payment for that good or service; i.e., the recipient of the real transfer is the initial beneficiary of a trade

Question 39

Reconciliation Theory

Answer 39

A thesis that encourages alienated citizens to feel themselves part of a society, as: From each according to ability, to each according to need (Karl Marx); or Arnold Toynbee's challenge-response mechanism. (See alienation theory)

Question 40

Returns to Scale

Answer 40

A production theory term used to indicate that all inputs have been increased proportionately; i.e., by the same percentage. (See returns to the variable factor)

Question 41

Returns to the Variable Factor(s)

Answer 41

A production theory term is used to indicate that the factors of production have been increased disproportionately, i.e., that at least one input has been increased while at least one input has remained fixed. (See returns to scale)

Question 42

Reverse Income Effect

Answer 42

When the price of a good is decreased and it thereby increases real income, and, as a result, the quantity demanded decreased. (See income effect and inferior good)

Question 43

Reverse Substitution Effect

Answer 43

When the price of a good is increased and it thereby becomes an attractive alternative to another good previously purchase. (See substitution effect and conspicuous consumption)

Question 44

Reward

Answer 44

In economics, reward is its own virtue

Question 45

Ricardians

Answer 45

The classical economists

Question 46

Robinson-Patman Act

Answer 46

The 1936 law that forbids certain forms of price discrimination. (See antitrust triology)

Question 47

Satiation Point

Answer 47

The point on a total utility function where satisfaction is maximized; i.e., where marginal utility equals zero

Question 48

Scarcity

Answer 48

In economics, any condition that causes a good or service to command a market price.

Question 49

Scholastics

Answer 49

The monks of the Dominican and Franciscan orders that recovered and copied Greek and Roman scholary works during the revival of learning between the ninth and fourteenth centuries. Obsessed with metaphysics, these "school me," led by St. Thomas Aquinas(1225-1274), sought a synthesis between Aristotelian rationalism and Christian dogma. (See metaphysics)

Question 50

Scientific Tariff

Answer 50

A tax on imports equal to the difference between domestic and foreign production costs. A law against the law of comparative advantage