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fall semester 2024 > Econ exam 3 > Flashcards

Econ exam 3 Flashcards

1
Q

what is a maximum price control law?

A

a price ceiling, prohibits from trading above a maximum
Qs is larger than Qd

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2
Q

what is a minimum price control law?

A

a price floor, prohibits from trading below a minimum
Qd is larger than Qs

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3
Q

what is a price control law?

A

laws that mandate what prices buyers and sellers must trade at

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4
Q

what is an effective price control law?

A

a price control law that keeps the price above or below the market clearing price

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5
Q

rent control laws :

A

max price control on housing

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6
Q

what is a rationing law?

A

laws that restrict peoples consumption of certain goods

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7
Q

what is price gouging?

A

charging a price that is “too high”

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8
Q

what is a price gouging law? (or an anti price gouging law)

A

a max price control on necessities during an emergency , set at a pre-emergency price

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9
Q

what is minimum wage law?

A

a minimum price control law on workers wages

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10
Q

what is a wage?

A

a price of labor

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11
Q

what is the unemployment rate?

A

the percentage of people that are actively looking for work but have no job

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12
Q

what is specialization?

A

do what we do best, and trade the rest
also division of labor

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13
Q

what is the theory of absolute advantage?

A

the theory that a person will specialize in producing the good for which they have the lowest resource cost

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14
Q

why is the theroy of absolute advantage wrong?

A
  • you can have no gains from trade
  • lowest resource cost doesnt matter
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15
Q

what is the theory of comparative advantage?

A

the theory that a person will specialize in producing the good for which they have the lowest opportunity cost

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16
Q

how do you find comparative advantage?

A

divide numbers together, whichever is lowest is opp cost.

EVERYONE HAS COMPARATIVE ADV

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17
Q

what is an export?

A

to sell something to a buyer in another country

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18
Q

what is an import?

A

to buy something from a seller in another country

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19
Q

what is free trade?

A

no restrictions on trade like government intervention or special tax.

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20
Q

what are the effects of exports?

A

-harms american consumers
-benefits american producers
- more harm than good

21
Q

what are the effects of imports?

A
  • harms american producers
  • benefits american consumers
  • more good than harm
22
Q

what is a trade barrier?

A

government action that restricts trade internationally

23
Q

what is perfectionism?

A

support for trade barriers

24
Q

what is a tariff?

A

a tax on imports

25
Q

what is the price of a good?

A

the amount of money the buyer must spend to buy it from a seller

26
Q

what is the cost of a good?

A

the amount of money the seller must spend to produce it
(cost of production)

27
Q

what is the total cost (TC) ?

A

the cost of producing a certain quantity of a good

28
Q

what is a fixed cost? (FC)

A

costs that do not vary with the quantity of units produced
- building, etc

29
Q

what is a variable cost? (VC)

A

costs that vary with the quantity of units produced
- labor, etc

30
Q

what is marginal product?

A

the additional output produced when one or more unit of variable input is added

31
Q

what is the phase of increasing marginal returns?

A

the range of input usage of which marginal product increases

32
Q

what is the phase of diminishing marginal returns?

A

the range of input usage of which marginal product decreases

33
Q

what is the average total cost? (ATC)

A

total cost / quantity of units produced

34
Q

what is the average fixed cost?
(AFC)

A

total fixed cost / quantity of units produced

35
Q

what is the average variable cost? (AVC)

A

total variable cost / quantity of units produced

36
Q

when the marginal is below the average…

A

the average is decreasing

37
Q

when the marginal is above the average…

A

the average is increasing

38
Q

what is economies of scale?

A

range where long run average total cost decreases as output increases

39
Q

what is diseconomies of scale?

A

range where long run average total cost increases as output increases

40
Q

what is constant return to scale?

A

range where long run average total cost stays constant as output increases

41
Q

what is total revenue?

A

amount of money seller receives in return for their products

42
Q

what is marginal revenue?

A

additional revenue a seller receives from selling one more unit

43
Q

what is profit?

A

total revenue - total cost

44
Q

what is accounting profit?

A

total revenue - explicit costs

45
Q

what is explicit costs?

A

the amount of money spent on all inputs on production process

46
Q

what is implicit costs?

A

the opportunity cost of money spent on all inputs of production process

47
Q

what is economic profit?

A

total revenue - explicit cost - implicit cost

48
Q

what is a transaction cost?

A

fall semester 2024 (5 decks)

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