Brainscape's Knowledge GenomeTM

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


See full index

ECO 1304 > Final > Flashcards

Final Flashcards

1
Q

Four kinds of goods

A
  • private goods
  • club goods
  • common resources
  • public goods
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Private goods

A

excludabe
rival in consumption
ie: clothing, congested toll rodes

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

Public goods

A

not excludable
not rival in consumption
ie: national defence, tornado siren

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

Common resources

A

not excludable
rival in consumption
ie: fish in the ocean, Crown land, congested non-toll roads

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

Club goods

A

excludable
not rival in consumption
ie: cable tv, fire protection, uncongested toll roads

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

Non-excludable

A

Producers cannot prevent particular individuals from enjoying its benefits.

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

Explicit costs

A

Input costs that require an outlay of money by the firm.

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

Implicit costs

A

Input costs that do not require an outlay of money by the firm.

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

Short-run

A

Time period where the number of firms in the industry and the amount of land and capital employed by existing firms towards the production of a good are fixed.

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

Long-run

A

Time period were all factors of production (FOP) are variable.

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

Monopoly

A

A market where one firm dominates the market for a good that has no substitutes and where significant barriers to entry exist.

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

Barriers to entry

A

Technical, competitive or cost-related impediments to joining a market and competing against the existing firms.

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

Natural monopoly

A

Occurs in a market where the lowest cost can be achieved when only one firm sells to the market. It is typically associated with large fixed start-up costs.

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

Price discrimination

A

Occurs when different prices are charged to different consumers for the same good by the same provider.

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

Marginal benefits

A

The additional utility or satisfaction derived by an increase or a decrease in the amount of an item consumed or an activity enjoyed.

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

Deadweight loss

A

The loss of welfare, utility or benefits to market participants, typically as a result of taxes, protectionist policies or externalities.

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

Shut-down rule

A

price of its output is less than its average variable cost of production.

(If the firms total losses exceed its total fixed costs, then the firm will minimise its losses by shutting down).

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

Monopolistic competition

A

A market is monopolistically competitive if there are many firms producing differentiated products and there are no barriers to entry.

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

Free Rider problem

A

A person who receives the benefit of a good but avoids paying for it

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

marginal changes

A

small incremental adjustments to a plan of action

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

inflation

A

an increase in the overall level of prices in the economy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

cost-benefit analysis

A

A study that compares the costs and benefits to society of providing a public good.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Tragedy of the Commons

A

a parable that illustrates why common resources are used more than is desirable from the standpoint of society as a whole

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

allocative efficeny

A

perfect amount of goods in market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

fixed costs

A

costs that do not vary with the quantity of output produced

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

variable costs

A

costs that vary with the quantity of output produced

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

sunk cost

A

a cost that has already been committed and cannot be recovered

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Economies of scale

A

when long-run average total cost falls as it increases production

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Diseconomies of scale

A

when long-run average total cost increases as it increases production

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Constant returns to scale

A

when it can increase production without changing long-run average total cost

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Competitive market

A

A market in which there are many buyers and many sellers so that each has a negligible impact on the market price (price takers).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Three characteristics of economics

A
  1. There are many buyers and many sellers in the
    market.
  2. The goods offered by the various sellers are
    largely the same.
  3. Firms can freely enter or exit the market.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

Exit

A

refers to a long-run decision to leave the market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

Moral hazard

A

The tendency of a person who is imperfectly monitored to engage in dishonest or otherwise undesirable behaviour

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

Agent

A

A person who is performing an act for another person,

called the principal

36
Q

Principal

A

A person for whom another person, called the agent, is performing some act

37
Q

Adverse selection

A

The tendency for the mix of unobserved attributes to become undesirable from the standpoint of an uninformed party

38
Q

Signalling

A

An action taken by an informed party to reveal private information to an uninformed party

39
Q

Screening

A

An action taken by an uninformed party to induce an informed party to reveal information

40
Q

Two types of of asymmetric information

A

hidden action

hidden characteristic

41
Q

Hidden action

A

employer doesn’t see the work and effort only the results

42
Q

Hidden Characteristic

A

true condition of a product trying to be sold

43
Q

Factors of production

A

the inputs to produce goods and services

44
Q

3 most important inputs

A
  • labour
  • capital
  • land
45
Q

Market for factors of production

A
  • differ from the markets for goods and services
  • the demand for FP comes from the decision to supply goods
    - “demand demand”
46
Q

Competitive firms

A
  • many firms
  • some good
  • free entry and exit
47
Q

Monopolies

A
  • has no competitors
  • no perfect substitutes
  • power to influence the price
48
Q

Comp. firms

A
  • take price as given

- choose level of output (Q)

49
Q

Causes of Monopolies

A

barrier to entry

50
Q

3 forms of barrier to entry

A
  1. monopoly owns a key resources
    - natural resource
  2. gov’t regulation
    - copyrights
    - patnets
    - licenses
  3. Natural Monopolies
    - can supply the good at a lower cost
51
Q

Price discrimination

A
  • sell the same good at different prices
  • monopoly is a price maker
  • willingness to pay
  • age, occupation, etc. disocunts
52
Q

Imperfect price discirmination

A

2nd and 3rd degree

53
Q

2nd degree

A

buy one get one 50% off

willingness to pay for the first unit is different than the 2nd

54
Q

3rd degree

A
  • segment the market and choices
  • different ticket prices for children
  • student pricing
55
Q

Public Policy

A
  • monopolies fail to allocate resources efficiently
  • quantity too low
  • price too high
  • competition law
56
Q

Regulation

A
  • regulate prices
  • subsidize the monopoly
  • no incentive for monopoly to lower costs
57
Q

Public ownership

A
  • gov’t run monopolies
  • “crown corporations”
  • debated in news
58
Q

profit formula

A

= total revenue (TR)

- total costs (TC)

59
Q

variable cost

A

you sometimes have to pay this depending on the situation ex: penalty fee, attorney bill, seasonal workers

60
Q

law of supply

A

The higher the price, the more producers are willing to supply

61
Q

Total costs formula

A

= total variable costs

+ total fixed costs

62
Q

Average Fixed Cost formula

A

(1) TFC÷Qs
(2) ATC − AVC

(Quantity supplied to market by producers)

63
Q

Average Variable Cost formula

A

(1) TVC÷Qs

(2) ATC − AFC

64
Q

Average Total Cost formula

A

= AVC (average variable cost)

+ AFC (average fixed cost)

65
Q

Average Product formula

A

= TP (total )

÷ Units of Labor

66
Q

Marginal cost formula

A

= ∆ in TC÷ ∆ in Qs

67
Q

Total Cost formula

A

= TFC

+ TVC

68
Q

Total Revenue formula

A

= P × Qs

69
Q

Total Product formula

A

= TR

− TC

70
Q

Average Revenue formula

A

= TR ÷ Qs

71
Q

Marginal Revenue formula

A

= ∆ in TR

÷ ∆ in Qs

72
Q

Tax revenue

A

= T× Q

73
Q

Externality

A

The uncompensated impact of one person’s actions on the well-being of a bystander

74
Q

Negative externalities

A
  • For each unit of aluminum produced, the social cost
    includes the private costs of the aluminum producers
    plus the costs to those bystanders affected adversely
    by the pollution.
  • Negative externalities lead markets to produce a
    larger quantity than is socially desirable.
75
Q

Positive externalities

A
  • Although some activities impose costs on third parties, others yield benefits. For example, consider
    education.
  • To move the market equilibrium closer to the social
    optimum, a positive externality requires a subsidy.
  • Positive externalities lead markets to produce a
    smaller quantity than is socially desirable
76
Q

Demand curve

A

social cost curve

77
Q

Quantity curve

A

social benefit curve

78
Q

the government can respond to

externalities in one of two ways

A
  1. Command-and-control policies regulate behaviour directly.
  2. Market-based policies provide incentives so that
    private decision makers will choose to solve the problem on their own
79
Q

Command and control policies

A
  • The government can remedy an externality by making certain behaviours either required or forbidden.
  • It is a crime to dump poisonous chemicals into the water supply.
80
Q

Corrective taxes and subsidies

A
  • the government can use market-based
    policies to align private incentives with social
    efficiency
  • For instance, the government can internalize the
    externality by imposing taxes on activities that have
    negative externalities and subsidizing activities that
    have positive externalities
81
Q

Corrective taxes

A

Taxes enacted to correct the effects of negative externalities

82
Q

Possible private solutions

A
  • Moral codes and social sanctions.
  • Charities.
  • The self-interest of the relevant parties.
  • Contracts.
83
Q

Marginal product:

A

The increase in output that arises from an additional unit of input

84
Q

Diminishing marginal product:

A

the marginal product of an input declines as the quantity of the input increases.

85
Q

Variable costs:

A

Costs that do vary with the quantity of output produced

86
Q

Coase theorem

A

if private parties can bargain without cost over the allocation of resources, they can solve the problem of externalities on their own

ECO 1304 (2 decks)

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