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Micro Economics > Econ Test 3 > Flashcards

Econ Test 3 Flashcards

1
Q

Efficient Quantity

A

the quantity that maximizes value to society
When MC=MB

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2
Q

Marginal Benefit Curve

A

always slope downward (equal to demand curves)

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3
Q

Marginal Cost Curve

A

always slope upward (equal to supply curves)

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4
Q

Price ceiling

A

legal maximum price

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5
Q

Dead weight loss

A

a loss of efficiency due to a market distortion

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6
Q

Price floor

A

legal minimum price

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7
Q

2 Consequences of price ceiling

A

shortage (QD > QS) & dead weight loss

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8
Q

Invisible hand

A

market forces direct individuals through self interest to outcomes that benefit society

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9
Q

Total surplus

A

the sum of producer surplus and consumer surplus

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10
Q

Producer surplus

A

the difference between price and marginal cost

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11
Q

Consumer surplus

A

the difference between the marginal benefit of consuming a good and the price you actually pay for

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12
Q

2 Consequences of a Price floor

A

surplus (QS>QD) & deadweight loss

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13
Q

Price controls

A

legally mandated prices

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14
Q

Price floor on labor

A

minimum wage

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15
Q

Unemployment

A

a surplus in the labor market

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16
Q

Why do we not observe substantial unemployment because of minimum wage?

A

-minimum wage may be inelastic
-minimum wage may be close to P*
-difficult to measure

17
Q

Black markets

A

a market that operates outside of the legal system

18
Q

3 Consequences of making goods and services illegal

A

-lower quality
-higher prices
-more violence

19
Q

Plurality voting

A

the option that receives the most votes wins

20
Q

Approval voting

A

voters select as many candidates as they wish

21
Q

Instrumental voting

A

making a decision as if your vote will change the outcome of the election

22
Q

Alternatives to plurality voting

A

-runoff elections
-ranked choice voting
-approval

Micro Economics (8 decks)

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