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Module 6 (Chapter 5)
Efficiency & Equality
28
Economics
Undergraduate 1
10/27/2015

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Term
The maximum price a consumer is willing to pay for a good is known as the...
Definition
Value of good
Term
An efficient method to allocate resources when the efforts of the participants are hard to monitor and reward directly is a...
Definition
Contest
Term
Market demand is the...
Definition
Sum of the quantities demanded by each individual at each price.
Term
Consumer surplus is the...
Definition
Difference between the marginal benefit of a good and the price paid for the good.
Term
Producer surplus is the...
Definition
Difference between producers' revenues and opportunity costs of production.
Term
The marginal cost of a service is...
Definition
Increasing with increased output.
Term
The overproduction of a good means that...
Definition
Marginal social cost exceeds marginal social benefit.
Term
Deadweight loss is...
Definition
The social loss from inefficiency.
Term
If resources are allocated efficiently, this means that...
Definition
The sum of consumer surplus and producer surplus is maximized.
Term
A principle of fairness that emphasizes equality of opportunity is...
Definition
Fair rules
Term
Economists tend to...
Definition
Agree about efficiency but disagree about fairness.
Term
According to Rawl's modified utilitarianism, income should be redistributed until...
Definition
The poorest man is as well off as possible, after incorporating the costs of income transfers.
Term
What applies to the results principle of fairness?
Definition
The big tradeoff
Term
A command system can work well to allocate resources when...
Definition
It is easy to monitor activities.
Term
The value of a good is its...
Definition
Marginal benefit
Term
The market demand curve is...
Definition
The horizontal sum of all individual demand curves.
Term
The market demand curve is formed by adding the...
Definition
Quantities demanded by each individual at each price.
Term
Consumer surplus is the marginal benefit of a good minus...
Definition
The price paid for it
Term
Consumer surplus equals the area below the demand curve, but...
Definition
Above market price.
Term
The market supply curve is the _________ of the individual firm supply curves.
Definition
Horizontal sum of individual firms supply curve
Term
The opportunity cost of producing a given quantity of a good is the area...
Definition
Under the supply curve
Term
Producer surplus is the marginal cost of producing a good minus its...
Definition
Marginal cost of production
Term
Adam Smith's "invisible hand" suggests that competitive markets send resources to their...
Definition
Highest-valued use
Term
Markets don't always use resources efficiently due to obstacles of efficiency such as...
Definition
Price and quantity regulations, monopolies, externalities, and high transaction costs.
Term
Deadweight loss is a loss to...
Definition
Consumers and producers
Term
Utilitarianism is an example of...
Definition
A fair results idea
Term
If we think of the total income of a society as a pie, a more equally shared pie results in a...
Definition
Smaller pie, due to the "big tradeoff" between efficiency and fairness.
Term
In economic life, the symmetry principle translates into...
Definition
Equality of opportunity
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