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Definition
| elasticity of the Demand or Supply curve. |
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| The Consumer Supply is designated as the area |
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Definition
| above price and below the demand curve. |
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| The Producer surplus is designated as the area |
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Definition
| below the price and above the Supply Curve. |
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| Producer Cost is the area |
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| below the quantity and below the S curve |
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domestic producers and their employees hurt
Consumers are better off. |
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| the limitation on the amount that can be imported. |
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Term
When a tariff is put in place, the quantity supplied _________ and the price_______.
quantity demanded ________ |
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Definition
| increases, increases, decreases. |
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Term
| when products are produced domestically |
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Definition
| consumers are hurt, producers benefit. |
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| one difference between tariffs and quotas is |
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Definition
| there is no government revenues |
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| quotas and tariffs result in |
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Definition
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Definition
| market failure/ is a transaction that doesn't take place inside a m arket |
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| an example of a positive externality is |
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Definition
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| An example of a non rivalrous and excludable good is |
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Definition
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| an example of a negative externality is |
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Definition
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Definition
| Firm's cost + externality costs |
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| when a negative externality is present we get |
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Definition
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| taxes and permits will in the end have |
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Definition
| the same effect on quantity |
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Definition
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Term
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Definition
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| Societies Marginal Benefits are |
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Definition
| individual's benefits + Postitive externalities |
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Term
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Definition
| the amount between curves at the efficient level |
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Term
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Definition
| means that your consumption doesn't dimiish other ppls consumption |
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Term
| Private Goods are _________. an example of a private good is_________. |
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Definition
| rivalrous and excludable. Hamburger |
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Term
| Pure Public goods are___________. an example of a pure public good is |
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Definition
| Non rivalrous and Non excludible. Clean air/National Defense |
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Term
| An Impure Public good is ______. an example of an impure public good is ______. |
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Definition
| Rivalrous and Non excludable. Common Resources |
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Term
| what is the Coase Theorem is |
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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 |
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Term
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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. |
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Term
| In thinking about various goods in the economy, it is useful to group them according to what two characteristics? |
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Definition
| excludability and rivalry |
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| with negative externalities, quantity produced is ______ than what is optimal for society, so the optimal level should be ______. |
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Definition
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| with positive externalities, the quantity produced is _______ than what is optimal for society, so the optimum quantity should be ______. |
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Term
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Definition
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| a monopoly will produce ___ than Q* and at a price _____ than P* |
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Definition
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Term
| In a perfectly competitie market there are ____ firms. In oligopoly there are _____. In monopoly there is ____ firm. |
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Definition
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Term
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Definition
| the study of how people behave in strategic situations . |
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Term
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Definition
| a particular game between two captured prisoners that illustrates why cooperation is difficult to maintain even when it is mutually beneficial. |
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Term
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Definition
| a strategy that is best for a player in a game regardless of the strategies chosen by other platers |
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| Solutions to negative externalities which we discussed include the following |
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Definition
| internalization of the externality ,the Coase Theorem, and Regulation. |
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| Subsidies are solutions for ________ externalities |
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Definition
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Term
| What is an example of a Private Good Solution |
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Definition
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Term
| Externalities produce market failure because |
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Definition
| the equilibrium Q in a market with an externality is not the same as the optimal level of ourput from a societal perspective. |
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Term
| Government subsidies can be used to |
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Definition
| achieve efficiency in a market when a positve externality exists. |
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Term
| when a negative externality is present the ____ curve shifts |
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Definition
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| When a positive externalitiy is present, the ______ curve shifts |
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Definition
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Term
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Definition
| the market, or original equilibrium |
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Term
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Definition
| societally optimal equilibrium |
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Term
| the components of a game include all of the following |
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Definition
| players, pay-offs, and strategies. NOT GOVERNMENT |
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Term
| The presence of a positive externality results in |
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Definition
| a market price which is too low and a market equilibrium that is too low |
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Term
| THe presence of a negative externality results in |
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Definition
| a market price that is too low and a market equilibrium that is too high |
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Term
| Internalizing the externality means to |
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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) |
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Term
| examples of market failure include |
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Definition
| externalities, monopoly, oligopoly. |
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Term
| an example of a correction of a market failure is |
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Definition
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Term
| The DWL that is associated with monopoly derives from |
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Definition
| the equilibrium Q being too low in the monopolized market. |
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Term
| when a natural monopoly is present, the appropriate governmental response is |
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Definition
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Term
| anti trust laws are designed to |
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Definition
| prevent the emergence of monopolies. |
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Term
| when a country becomes an exporter producers are_________ and consumers are_________. |
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Definition
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| after a country permits trade, it will become |
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