Econ Test #2 Flashcards
Factors that affect trade costs (and may result in less trade)
shipping costs, tariffs, taxes, language barriers, time zone challenges, etc
what factors affect trade that may result in MORE trade?
geographically close to one another,
share a common language, or are a part of a trade agreement that reduces costs of trade.
when looking at winners and losers, what else do you need to include?
deadweight loss and net gains/losses. Talk about how society gains or loses in a whole.
what happened to US income distribution since 1930? Use exact numbers if possible
do this
charge calculator
do this
marginal private cost is equal to which curve
supply curve
not sure if something is a monoploy or something else?
use if then statements
externalities what lines do you use
MPC and MSC
What are the 2 categories to regulate monopolies and bring competition?
- ensure competition thrives 2. minimize the harmful ways that businesses might exploit their market power
to ways to minimize market power
anti collusion laws and price ceilings
why does the number of firms in a market affect power
when there are more SUBSTITIUTES there is less power. This makes demand curve MORE elastic
When writing answers
make it stupidly obvious. over explain.
how does demand need to be if a firm stays open?
demand needs to be equal to or greater than average cost
which firms make differentiated products?
monopolistic competition and monopoly
which firms have q < q*
monopolistic competition and monopoly
pick q so that MR=MC
monopolistic competition and monopoly
pick q so that P=MC
perfect competition
earn economic profit in the long run
monopoly
face a downward sloping demand curve
monopolistic competition and monopoly
have MR less than price
monopolistic competition and monopoly
face the entry of other firms
perfect competition and monopolistic competition
if oligopies interact more than once, are they cloer to a monoploy or competative?
LOOK THIS UP
what has happened to income inequality in the us since 1930?
learn this
what has happened to income inequality in the us since 1970?
explain?
absolute advantage
the ability to do a task using fewer inputs (comparing task A for one country to task A for another)
comparative advantage
the ability to do a task at a lower opportunity cost (the fractions for each country)
theory of comparative advantage (economic theory)
countries will specialize in production in which they have comparative advantage. They will export these products and import those of which other countries have comparative advantage
domestic demand curve
shows the quantity of a good that all domestic consumers added together plan to buy at each price
domestic supply curve
shows the quantity of good that all domestic supplies added together plan to sell at each price
tariff is meant to protect whom
producers of a good (domestic)
import quota
a limit on the quantity of a good that can be imported
externality
the affect of something on bystanders
marginal private cost
extra cost paid by the seler from one extra unit
marginal external cost
extra external beneift accuring to bystanders from one extra unity
marginal social benefit
all marignal benefits no matter who gets them
marginal social benefit equation
= MPB+MEB
rational rule for society
produce more of an item if its marginal social benefit is greater than or equal to marginal social cost
corrective tax is = ?
= marginal external COST
corrective subsidy = ?
marginal external BENEFIT
private good
rival and excludable
toilet paper
common resource
nonexcludable and rival
public tissue box
club goods
nonrival and excludable
gym membership
public goods
nonexludable and nonrival
air and sunlight
gini coefficient
a / (A+B)
if gini = 0 then perfect equality. if = to 1, then perfect inequality
accounting profit
the total revenue a business receives, less its explicit costs
accounting profit equation
= total revenue- explicit financial costs
economic profit
= total revenue-explicit financial costs - entrepreuuer’s implicit costs
average revenue
total revenue/quantity supplied
if you charge everyone at same price then AV is = price
how can a firm get to max economic profit
min. costs, increase demand, make demand inelastic, reduce demand for substitutes.
first degree price discrimination
firm charges maximum price for each unit consumed (think ebay)
second degree price discrimination
looking at which demand curve someone is in and changing price based on this. charge higher to groupe with less elastic demand
demand =
MB
supply=
MC
