Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

MicroEcon Fall 24 > Exam 2; 11/14 > Flashcards

Exam 2; 11/14 Flashcards

1
Q

Elastic demand curves have…

A

An absolute value that is greater than one, requiring prices to be lowered

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Inelastic demand curves have…

A

an absolute value that is less than one, requiring prices to be raised

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Substitute goods will have…

A

Positive value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Complementary goods will have…

A

Negative value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Normal goods will have…

A

Positive value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Inferior goods will have…

A

Negative value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Statutory Burden:

A

Determines which curve shifts and in what direction depending on who is assigned to pay the tax/subsidy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Economic Burden:

A

The monetary burden created by the change in after-tax price for buyers and sellers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Tax Incidence:

A

Tax paid by buyers over(divided by) total tax, determined by price elasticity.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

The more inelastic party bears ____ of the tax/subsidy

A

More

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Price ceiling:

A

Maximum price sellers are allowed to charge

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Binding price ceiling

A

price ceiling that occurs below the market equilibrium price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Price Floor

A

Minimum price sellers are allowed to charge

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Binding price floor

A

Price floor that occurs above the market equilibrium price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Mandate

A

Minimum quantity that must be bought or sold

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Binding Mandate

A

Mandate that occurs to the right of the equilibrium quantity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Quota

A

Maximum quantity that can be bought or sold

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Binding quota

A

Quota that occurs to the left of the equilibrium quantity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Positive Analysis

A

Describes what is happening, explaining why or predicting what will happen, forecasting effects

20
Q

Normative Analysis

A

Prescribes what should happen, involves value judgements

21
Q

Optimal/Efficient Outcome

A

Outcome yielding the most economic surplus

22
Q

Consumer Surplus

A

Marginal benefit minus price

23
Q

Producer surplus

A

Price minus marginal cost

24
Q

Deadweight loss

A

Economic surplus at efficient outcome minus actual economic surplus

25
Q

5 Main Sources of Market Failure

A
  1. Market Power
  2. Externalities
  3. Information Problems
  4. Irrationality
  5. Government Regulations
26
Q

Externality

A

A side effect(NOT a price change) of an activity that affects bystanders whose interests are not taken into account

27
Q

Private interests

A

Costs and benefits you personally incur

28
Q

Social interests

A

includes all costs and benefits

29
Q

Marginal Private Cost (MPC)

A

The extra costs paid by the seller from producing one extra unit

30
Q

Marginal External Cost (MEC)

A

The extra cost imposed on bystanders from producing one extra unit

31
Q

Marginal Social Cost (MSC)

A

All marginal costs (MPC + MEC)

32
Q

Marginal Private Benefit (MPB)

A

The extra enjoyment for the buyer from purchasing one extra unit

33
Q

Marginal External Benefit (MEB)

A

The extra benefit accruing to bystanders from one extra unit

34
Q

Marginal Social Benefit (MSB)

A

All marginal benefits (MPB + MEB)

35
Q

Rational Rule for Society

A

Produce more of an item as long as its marginal social benefit is at least as large as the marginal social cost

36
Q

Coase Theorem

A

If bargaining is costless and property rights are clearly established & enforced, then externality problems can be solved by private bargains

37
Q

Excludable & Rival?

A

Private Goods
ex. Cars, cupcakes, airline seats, can of coke

38
Q

Excludable & Nonrival?

A

Club Goods
ex. email, cable tv, satellite radio

39
Q

Non-excludable & Rival?

A

Common Resources
ex. fish in the ocean, national parks, highways

40
Q

Non-excludable & Non-rival?

A

Public Goods
ex. national defense, Public broadcasting, public education

41
Q

Private/Asymmetric information

A

When one party to a transaction knows something the other doesn’t

42
Q

Adverse selection of sellers

A

The tendency for the mix of goods to be skewed toward more low-quality goods when buyers are at informative disadvantage

43
Q

Adverse selection of buyers

A

The tendency for the mix of buyers to be skewed toward more high cost buyers when sellers are at informative disadvantage

44
Q

Moral Hazard

A

The actions you take because they are not fully observable and you are partially insulated from their consequences

45
Q

Principal agent problem

A

The problems that arise when a principal hires an agent to do something on their behalf, but the principal cannot perfectly observe the agents actions

46
Q

If negative externality…

A

Use corrective tax, supply curve shifts

47
Q

If positive externality…

A

Use corrective subsidy, demand curve shifts

MicroEcon Fall 24 (2 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions