Econ Vocab

Question 1

Statutory Burden

Answer 1

The statutory burden of a tax describes the burden of
being assigned by the government the responsibility of
sending a tax payment.

Question 2

economic burden

Answer 2

describes the burden created by the change in after-tax
prices faced by buyers and sellers.

Question 3

tax incidence

Answer 3

The division of the economic burden of a
tax between buyers and sellers.

Question 4

when demand is relatively elastic.

Answer 4

Buyers bear a smaller share of the economic
burden

Question 5

when supply is relatively elastic.

Answer 5

Sellers bear a smaller share of the economic
burden

Question 6

Any change affecting sellers or their marginal costs will

Answer 6

shift the supply
curve.

Question 7

Any change affecting buyers or their marginal benefits will

Answer 7

shift the
demand curve.

Question 8

An increase in taxes will shift the curve to the

Answer 8

left

Question 9

A decrease in taxes will shift the curve to the

Answer 9

right

Question 10

subsidy

Answer 10

a payment made by the government to
those who make a specific choice

Question 11

price ceiling

Answer 11

a maximum price sellers can charge

Question 12

price floor

Answer 12

a minimum price sellers can charge

Question 13

binding price ceiling

Answer 13

a price ceiling that prevents the market from reaching the market equilibrium price

Question 14

binding price floor

Answer 14

a price floor that prevents the market from reaching the equilibrium price

Question 15

quantity regulation

Answer 15

a minimum or maximum quantity that could be sold

Question 16

mandate

Answer 16

a requirement to buy or sell a minimum amount of a good

Question 17

quota

Answer 17

a limit on the maximum quantity of a good that can be sold

Question 18

price is above equilibrium

Answer 18

a surplus results, pushing the price down

Question 19

price is below equilibrium

Answer 19

a shortage results, pushing the price up

Question 20

price is rising

Answer 20

at the current price, the quantity demanded exceeds quantity supplied

Question 21

price is falling

Answer 21

quantity supplied exceeds quantity demanded

Question 22

3 symptoms of a market out of equilibrium

Answer 22

queuing (looking for parking spot), bundling of extras ( buying something to get something else like dinner so you get valet), a secondary market (using someones driveway)

Question 23

positive analysis

Answer 23

describes what is going to happen ( why should we do this?)

Question 24

normative analysis

Answer 24

assesses what should happen (which is the better outcome, what policy should the government adopt?)

Question 25

equity

Answer 25

an outcome yields greater equity if it results in a fairer distribution of economic benefits

Question 26

consumer surplus

Answer 26

the economic surplus you get from buying something
consumer surplus=marginal benefit-price

Question 27

efficient production

Answer 27

producing a given quantity of output at the lowest possible cost, which requires producing each good at the lowest marginal cost

Question 28

efficient allocation

Answer 28

allocating goods to create the largest economic surplus, which requires that each good goes to the person who’ll get the highest marginal benefit from it

Question 29

efficient quantity

Answer 29

the quantity that produces the largest possible economic surplus

Question 30

rational rule for markets

Answer 30

to increase economic surplus, produce more of an item if the marginal benefit of one more is greater than (or equal to) its marginal cost

Question 31

market failure

Answer 31

when the forces of supply and demanded lead to an inefficient outcome

Question 32

sources of market failure

Answer 32

1.market power
2.externalities
3.information problems
4.irrationality
5. government regulations

Question 33

deadweight loss

Answer 33

economic surplus at efficient quantity- actual economic surplus

Question 34

distributional consequences

Answer 34

who gets what?