ECON201

Question 1

externalities

Answer 1

markets are usually a good way to organize economy activities

Question 2

negative externalities

Answer 2

impact on the bystander is adverse

Question 3

market failures

Answer 3

1)externalities (CH 10)
2)monopolies (CH 15)
3)public goods x common resources (CH 11)

Question 4

negative externalities

Answer 4

impact on the bystander is adverse

Question 5

demand curve shows private value

Answer 5

the value to buyers

Question 6

demand curve shows private value

Answer 6

the value to buyers

Question 7

supply curve shows private cost

Answer 7

the cost directly incurred by sellers

Question 8

supply curve shows private cost

Answer 8

the cost directly incurred by sellers

Question 9

Social cost =

Answer 9

Private cost+external cost

Question 10

external cost

Answer 10

=value of negative impact on bystanders

Question 11

Positive externalities

Answer 11

the social value of a good includes:
private value- the direct value to buyers
external benefit- the value of positive impact on bystanders
ex: vaccines, research and development create knowledge others can use

Question 12

public policies toward externalities

Answer 12

command-and-control policies
regulate behavior directly
market-base policies
incentives so that private decision makers will choose to solve the issue on their own

Question 13

coase theorem

Answer 13

• small number of individuals
• low/insignificant costs
• equal bargaining power

Question 14

private good

Answer 14

excludable and rival in consumption

Question 15

public good

Answer 15

not excludable and not rival in consumption

Question 16

common resource

Answer 16

not excludable but rival in consumption

Question 17

club goods

Answer 17

excludable but not rival in consumption

Question 18

free rider

Answer 18

use good but not pay; reduce revenue

Question 19

is there a lot of common resources

Answer 19

no

Question 20

is there a lot of public goods

Answer 20

yes

Question 21

the laffer curve

Answer 21

shows the relationship between the size of the tax and the tax revenue

Question 22

Pretax (total surplus)

Answer 22

CS+PS

Question 23

After tax (total surplus)

Answer 23

CS+PS+Government Revenue

Question 24

Tax

Answer 24

PB-PS

Question 25

what shape is the deadweight loss

Answer 25

triangle

Question 26

true or false: higher elasticities of supply and demand will create larger deadweight losses after taxes are imposed

Answer 26

true

Question 27

What is this

Answer 27

The laffer curve

Question 28

formula for deadweight loss

Answer 28

1/2 b*h

Question 29

profit=

Answer 29

total revenue-total costs

Question 30

what are the factors of production

Answer 30

Labor (L)
Capital (K)
Energy
Land

Question 31

total cost of production=

Answer 31

explicit cost+ implicit cost

Question 32

accounting profit=

Answer 32

total revenue-total explicit cost

Question 33

economic profit=

Answer 33

total revenue-total cost

Question 34

What axis does the labor, total output go on

Answer 34

X

Question 35

What axis does the the total product and total cost go on

Answer 35

Y

Question 36

Explain short run

Answer 36

SOME goods are fixed

Question 37

explain long run

Answer 37

ALL inputs are CHANGING