Term
|
Definition
| Resources that get allocated to the highest value of production. |
|
|
Term
|
Definition
| The production of goods and services according to the individual demand. |
|
|
Term
|
Definition
| When a third party bears a cost from a market transaction in which they take no part. (Affected but no intentionally) |
|
|
Term
|
Definition
| When a third party benefits from a market transaction in which they take no part. |
|
|
Term
|
Definition
| When a third party is affected by market transactions. |
|
|
Term
|
Definition
| Market over provides the good from society point of view. |
|
|
Term
|
Definition
| Market under provides the good from a society point of view. |
|
|
Term
|
Definition
| One person consumes only at the expense of someone else being able to consume the good. |
|
|
Term
|
Definition
| Once you buy something you can exclude others from using it. (Private Good) |
|
|
Term
|
Definition
|
|
Term
|
Definition
| Non rival and non excludable. |
|
|
Term
|
Definition
| Upper limit set on a price. |
|
|
Term
|
Definition
| Price ceiling below price equilibrium. |
|
|
Term
|
Definition
| Price ceiling above the price equilibrium. |
|
|
Term
|
Definition
| Lower limits set on price. |
|
|
Term
|
Definition
| Price floor above the price equilibrium. |
|
|
Term
|
Definition
| Price floor below the price equilibrium. |
|
|
Term
| Changes in Quantity Demand |
|
Definition
| Movement along the demand curve caused by a change of the price of a good itself. |
|
|
Term
|
Definition
| At each price, more is demanded after the rightward shift. |
|
|
Term
|
Definition
1. Prices of Related Goods
2.Income
3.Population
4. Preference
5. Price Expectations
6. Compliments |
|
|
Term
|
Definition
| Substitutes. Demand shifts to the left for a good when its substitute price falls. |
|
|
Term
|
Definition
| Demand shifts to the right when this rises. |
|
|
Term
|
Definition
| Demand shifts to the right when the population for something rises. |
|
|
Term
|
Definition
| Demand shifts to right or left depending on this normative statement. |
|
|
Term
|
Definition
| Demand shifts to the right when prices expect to rise at a later point in time. |
|
|
Term
| Changes in Quantity Supplied |
|
Definition
| Movement along the supply curve duet the change in price. |
|
|
Term
|
Definition
| Increase in supply shifts to the right, decrease in supply shift to the left. |
|
|
Term
|
Definition
1.Prices of Factor of Production
2. Technological Advance
3. Compliments of Production
4.Number of Firms
5.Subsidies and Taxes
6.Expectations of Future Prices
7. Natural Disasters |
|
|
Term
| Prices of Factors of Production |
|
Definition
| Supply shifts to the left when prices of factors rise. Ex. (The market for new houses when the price of lumber rises.) |
|
|
Term
|
Definition
| Supply shifts to the right. Ex. (New software) |
|
|
Term
| Compliments of Production |
|
Definition
| Shifts to the left when one compliment price rises. |
|
|
Term
|
Definition
| Shifts to the right when new firms enter the market. |
|
|
Term
|
Definition
| Shifts supply to the left, charge of goods. |
|
|
Term
|
Definition
| Government giving money to firms. Shifts supply to the right. |
|
|
Term
|
Definition
| Shifts supply to the the left. (Hurricanes, tornadoes,) |
|
|
Term
| What causes market failure? |
|
Definition
| Inefficiency, because of lack of competition, price fixing, and predatory pricing. |
|
|
Term
|
Definition
| Monopolys cause lack of competition because all of one market is controlled by one company. Antitrust competitive practices such as price fixing and predatory pricing. |
|
|
Term
|
Definition
| colluding/cooperating with competitors. |
|
|
Term
|
Definition
| Putting prices low only to drive out the competition. |
|
|
Term
|
Definition
| When information is asymmetric or trading parties may not be in a position to make a rational choice. |
|
|
Term
|
Definition
| Third party affected by a market transaction. |
|
|
Term
|
Definition
| When a third party bears a cost from a market transaction in which they take no part. (Affected but not intentional) Ex. Smoking. (Over provides) |
|
|
Term
|
Definition
When a third party benefits from a market transaction in which they take no part. Ex. Flu shot
(Under Provides) |
|
|
Term
| The 4 ways to deal with externalities |
|
Definition
1. Ensure Private Property Rights
2. Taxes
3. Subsidies
4. Do nothing |
|
|
Term
|
Definition
| Non rival and non excludable. |
|
|
Term
|
Definition
| One person consumes only at the expense of someone else being able to consume the good. |
|
|
Term
|
Definition
| One persons consumption does not limit someone else from consuming. |
|
|
Term
|
Definition
| Once you buy something you can exclude others from doing it. |
|
|
Term
|
Definition
| No one can be excluded from consumption. |
|
|
Term
|
Definition
| Upper limit on price. Price ceiling is binding if below the price equilibrium. |
|
|
Term
| What does a binding price ceiling cause? |
|
Definition
|
|
Term
|
Definition
| Lower limits set on a price. Price floor is binding when above the equilibrium. |
|
|
Term
|
Definition
| Keeps price from reaching equilibrium price level. |
|
|
Term
| When price floor is binging what is the result? |
|
Definition
|
|
Term
| Impacts of binding rent control |
|
Definition
| Since price ceiling is binding it causes a shortage. Therefore, this causes entrance fees, higher search costs, declines in quality and maintenance of rental housing, and large deserted apartment complexes in inner cities. Future supply will decline because there is no incentive for new construction. |
|
|
Term
| Minimum Wage (Graph and Impacts) |
|
Definition
| Binding price floor minimum wage is inefficient and causes unemployment, a surplus of workers, and is above the wage equilibrium. |
|
|
Term
|
Definition
| A tax imposed on specific goods. Shifts supply curve to the left. |
|
|
Term
|
Definition
| A tax on some specific imported good. A tariff shifts the supply curve to the left. Tariffs cause higher prices and lower quantity. |
|
|
Term
|
Definition
| Quantity limit on imports. Is a straight vertical line on the graph that cause price to rice and quantity to drop. |
|
|
Term
|
Definition
| A market failure that occurs when people take advantage of being able to use a common resource, or collective good, without paying for it, as is the case when citizens of a country utilize public goods without paying their fair share in taxes. |
|
|
Term
|
Definition
| Providing economic security for selected groups. (Cash!) |
|
|
Term
|
Definition
| Other adjustments for undesired market outcomes. (not cash) |
|
|
Term
|
Definition
|
|
Term
| Compliments of Consumption |
|
Definition
| Goods that are consumed together. If the price of one compliment increases, then the demand for the other decreases. |
|
|
Term
| Result of quotas and tariffs. |
|
Definition
| They restrict competition. |
|
|
