CH-4

Question 1

Optimal Mix of Output

Answer 1

The most desirable combination of output attainable with existing resources, technology, and social values.

Question 2

Causes of market failure

Answer 2

1. Public Goods (as apposed to private)
2. Externalities (cost/ben born by 3rd party)
3. Market Power
4. Inequity

Question 3

Antitrust

Answer 3

Government intervention to alter market structure or prevent abuse of market power.

Question 4

Natural Monopoly

Answer 4

An industry in which one firm can achieve economies of scale over the entire range of market supply.

Question 5

Transfer Payments (govt)

Answer 5

Payments to individuals for which no current goods or services are exchanged, like Social Security, welfare, and unemployment benefits.

Question 6

Meret Good

Answer 6

A good or service society deems everyone is entitled to some minimal quantity of.

Question 7

Inflation

Answer 7

An increase in the average level of prices of goods and services.

Question 8

Progressive

Answer 8

A tax system in which tax rates rise as incomes rise.

Question 9

Proportional tax

Answer 9

A tax that levies the same rate on every dollar of income.

Question 10

Regressive Tax

Answer 10

A tax system in which tax rates fall as incomes rise.

Question 11

Government Failure

Answer 11

Government intervention that fails to improve economic outcomes.