Chapter 6-10

Question 1

Market Price

Answer 1

When a market price allocates a scarce resource, the people who get the resource are those who are willing and able to pay the market price

Question 2

Command System

Answer 2

allocates resources by the order of someone in authority

Question 3

Majority Rule

Answer 3

allocates resource in the way that a majority of voters choose

Question 4

Contest

Answer 4

allocates resources to a winner

Question 5

first come first serve

Answer 5

allocates resources to those who are first in line

Question 6

sharing equally

Answer 6

everyone gets the same amount of it

Question 7

lottery

Answer 7

allocate resources to those who pick the winning number, draw the lucky cars, or come up lucky on some other system

Question 8

Personal Characteristics

Answer 8

people with the right characteristics get the resources

Question 9

Force

Answer 9

military force, theft

Question 10

allocative efficiency

Answer 10

achieved when the quantities of goods and services produced are those that people value most highly

Question 11

Marginal benefit

Answer 11

the benefit that people receive from consuming one more unit of a good or service. determined by peoples preferences

Question 12

Marginal cost

Answer 12

the opportunity cost of producing one more unit of a good or service

Question 13

Deadweight loss

Answer 13

the decrease in total surplus that results from an inefficient underproduction or overproduction

Question 14

Tax incidence

Answer 14

the division of the burden of a tax between the buyer and the seller

Question 15

excess burden

Answer 15

the amount by which the burden of a tax exceeds the tax revenue recieved by the government- the deadweight loss from a tax

Question 16

Price ceiling or price cap

Answer 16

a government regulation that places an upper limit on the price at which a particular good, service, or factor of production may be traded

Question 17

Rent ceiling

Answer 17

a regulation that makes it illegal to charge more than a specified rent for housing

Question 18

Black market

Answer 18

an illegal market that operates alongside a government related market

Question 19

Price floor

Answer 19

a government regulation that places a lower limit on the price at which a particular good, service, or factor of production may be traded

Question 20

Minimum wage law

Answer 20

government regulation that makes hiring labor services for less than a specified wage is illegal

Question 21

Price support

Answer 21

a price floor in an agricultural market maintained by a government guarantee to buy any surplus output at that price

Question 22

subsidy

Answer 22

a payment by the government to a producer to cover part of the cost of production

Question 23

Tariff

Answer 23

a tax imposed on a good when it is imported

Question 24

import quota

Answer 24

a quantitative restriction on the import of a good that limits the maximum quantity of a good that may be imported in a given year

Question 25

dumping

Answer 25

when a foreign firm sells its exports at a lower price than its cost of production

Question 26

rent seeking

Answer 26

lobbying and other political activity that aims to capture the gains from trade

Question 27

Externality

Answer 27

a cost or a benefit that arises from production and that falls on someone other than the producer or a cost or benefit that arises from consumption and that falls on someone other than the consumer

Question 28

Negative externality

Answer 28

a production or consumption activity that creates an external cost

Question 29

Positive externality

Answer 29

a production or consumption activity that creates an external benefit

Question 30

Marginal private cost

Answer 30

the cost of producing an additional unity of g or s that is borne by the producer of that good or service

Question 31

Marginal external cost

Answer 31

the cost of producing an additional unit of a good or service that falls on people other than the producer

Question 32

Marginal social cost

Answer 32

the MC incurred by the entire society, MSC=marginal private cost+marginal external cost

Question 33

Marginal private benefit

Answer 33

the benefit from an additional unit of good or service that the consumer of that god or service recieves

Question 34

Marginal external benefit

Answer 34

the benefit from an additional good or service that the people other than the consumer of that good enjoy

Question 35

Marginal social benefit

Answer 35

MSB= marginal private benefit+ marginal external benefit

Question 36

Public provision

Answer 36

the production of a good or service by a public authority that receives most of its revenue from the government

Question 37

voucher

Answer 37

a token that the government provides to households, which they can use to buy specified goods or services

Question 38

explicit cost

Answer 38

a cost paid in money

Question 39

implicit cost

Answer 39

an opportunity cost incurred by a firm when it uses a factor of production for which it does not make a direct money payment

Question 40

Economic Depreciation

Answer 40

an opportunity cost of a firm using capital that it owns, measured as the change in the market value of captial over a given period

Question 41

Normal profit

Answer 41

the return to entrepreneurship. Normal profit is part of a firms opportunity cost because it is the cost of not running another firm

Question 42

economic profit

Answer 42

total revenue minus total cost

Question 43

short run

Answer 43

the time frame in which the quantities of some resources are fixed

Question 44

Long run

Answer 44

the time frame in which the quantities of all resources can be varied

Question 45

Total product

Answer 45

the total quantity of a good produced in a given period

Question 46

Total cost

Answer 46

cost of all factors of production | TC=TFC+TVC

Question 47

total fixed cost

Answer 47

cost of land, capital =, and entrepreneurship

Question 48

total variable cost

Answer 48

cost of labor

Question 49

marginal cost

Answer 49

the change in total cost that results from a one unit increase in output

Question 50

average fixed cost

Answer 50

total fixed cost per unit of output