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Mankiw chaps 9, 10, 11, 15, 16
review on chap 9, 10, 11, 15, 16
58
Economics
Undergraduate 2
12/10/2007

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Term
Tax burdon depends on
Definition
elasticity of the Demand or Supply curve.
Term
The Consumer Supply is designated as the area
Definition
above price and below the demand curve.
Term
The Producer surplus is designated as the area
Definition
below the price and above the Supply Curve.
Term
Producer Cost is the area
Definition
below the quantity and below the S curve
Term
Imports lead to
Definition
domestic producers and their employees hurt
Consumers are better off.
Term
A Tariff is
Definition
a tax on imports
Term
Quota is
Definition
the limitation on the amount that can be imported.
Term
When a tariff is put in place, the quantity supplied _________ and the price_______.
quantity demanded ________
Definition
increases, increases, decreases.
Term
when products are produced domestically
Definition
consumers are hurt, producers benefit.
Term
one difference between tariffs and quotas is
Definition
there is no government revenues
Term
quotas and tariffs result in
Definition
Dead Weight Loss
Term
and externality is a
Definition
market failure/ is a transaction that doesn't take place inside a m arket
Term
an example of a positive externality is
Definition
education
Term
An example of a non rivalrous and excludable good is
Definition
cable TV
Term
an example of a negative externality is
Definition
pollution
Term
Societal Costs are
Definition
Firm's cost + externality costs
Term
when a negative externality is present we get
Definition
overproduction
Term
taxes and permits will in the end have
Definition
the same effect on quantity
Term
the more education
Definition
the less it is valued
Term
the higher the education
Definition
the more it costs
Term
Societies Marginal Benefits are
Definition
individual's benefits + Postitive externalities
Term
subsidy is
Definition
the amount between curves at the efficient level
Term
non rivalrous
Definition
means that your consumption doesn't dimiish other ppls consumption
Term
Private Goods are _________. an example of a private good is_________.
Definition
rivalrous and excludable. Hamburger
Term
Pure Public goods are___________. an example of a pure public good is
Definition
Non rivalrous and Non excludible. Clean air/National Defense
Term
An Impure Public good is ______. an example of an impure public good is ______.
Definition
Rivalrous and Non excludable. Common Resources
Term
what is the Coase Theorem is
Definition
the proposition that if private parties can bargain without cost over the allocation of resources, they can solve the problem of the externalities on ther own
Term
a free rider is
Definition
a person who receives the benefit of the good but avoids paying for it. This problem prevents the private market from supplying public goods.
Term
In thinking about various goods in the economy, it is useful to group them according to what two characteristics?
Definition
excludability and rivalry
Term
with negative externalities, quantity produced is ______ than what is optimal for society, so the optimal level should be ______.
Definition
greater, less
Term
with positive externalities, the quantity produced is _______ than what is optimal for society, so the optimum quantity should be ______.
Definition
less, more
Term
with externalities comes
Definition
market failures.
Term
Exclusion results in
Definition
inefficiencies.
Term
a monopoly will produce ___ than Q* and at a price _____ than P*
Definition
less, greater
Term
In a perfectly competitie market there are ____ firms. In oligopoly there are _____. In monopoly there is ____ firm.
Definition
lots, a few, one
Term
game theory is
Definition
the study of how people behave in strategic situations .
Term
Prisoner's dilemma is
Definition
a particular game between two captured prisoners that illustrates why cooperation is difficult to maintain even when it is mutually beneficial.
Term
A dominant strategy is
Definition
a strategy that is best for a player in a game regardless of the strategies chosen by other platers
Term
Solutions to negative externalities which we discussed include the following
Definition
internalization of the externality ,the Coase Theorem, and Regulation.
Term
Subsidies are solutions for ________ externalities
Definition
positive
Term
What is an example of a Private Good Solution
Definition
Coase Theorem
Term
Externalities produce market failure because
Definition
the equilibrium Q in a market with an externality is not the same as the optimal level of ourput from a societal perspective.
Term
Government subsidies can be used to
Definition
achieve efficiency in a market when a positve externality exists.
Term
when a negative externality is present the ____ curve shifts
Definition
Supply.
Term
When a positive externalitiy is present, the ______ curve shifts
Definition
demand
Term
"efficient" refers to
Definition
the market, or original equilibrium
Term
"optimal" refers to the
Definition
societally optimal equilibrium
Term
the components of a game include all of the following
Definition
players, pay-offs, and strategies. NOT GOVERNMENT
Term
The presence of a positive externality results in
Definition
a market price which is too low and a market equilibrium that is too low
Term
THe presence of a negative externality results in
Definition
a market price that is too low and a market equilibrium that is too high
Term
Internalizing the externality means to
Definition
alter incentives so that ppl take into account of the external effects on their actions. (ie, farm buys up all of the houses around it so they can't sue for smells)
Term
examples of market failure include
Definition
externalities, monopoly, oligopoly.
Term
an example of a correction of a market failure is
Definition
a unit tax
Term
The DWL that is associated with monopoly derives from
Definition
the equilibrium Q being too low in the monopolized market.
Term
when a natural monopoly is present, the appropriate governmental response is
Definition
regulate prices
Term
anti trust laws are designed to
Definition
prevent the emergence of monopolies.
Term
when a country becomes an exporter producers are_________ and consumers are_________.
Definition
better off, worse off.
Term
after a country permits trade, it will become
Definition
an exporter.
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