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Micro 1 > Micro 1.4 > Flashcards

Micro 1.4 Flashcards

1
Q

What is market failure?

A

When the price mechanism leads to an inefficient allocation of resources and a deadweight loss of economic welfare

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2
Q

What is complete market failure?

A

When the market does not supply products at all, there is a missing market

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3
Q

What is partial market failure?

A

When the market functions but it supplies at the wrong quantity or price

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4
Q

What is the economic welfare calculation?

A

Consumer surplus + Producer surplus

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5
Q

What is a public good?

A

A good that is non-rival in consumption, non-excludable and non-rejectable

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6
Q

What is a non-excludable good?

A

A good that cannot be solely confined to those who payed for it

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7
Q

What is a non-rival consumption good?

A

A good where one party’s enjoyment of the good or service does not diminish others’ enjoyment

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8
Q

What is a non-rejectable good?

A

The collective supply of a pure public good for all means that it cannot be rejected by people

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9
Q

What is the free rider problem?

A

Individuals having an incentive to use a good without contributing towards cost

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10
Q

What is a quasi-public good?

A

A near public good, it has some characteristics of a public good

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11
Q

What is a semi-non-rival good?

A

A good that is non-rival up to a point

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12
Q

What is a semi-non-excludable good?

A

A good that is difficult to exclude non-paying consumers from

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13
Q

What is a public bad?

A

A good that has negative externalities leading to a loss of economic welfare

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14
Q

What is a global public good?

A

A good that benefits all countries

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15
Q

What is the tragedy of the commons?

A

The pursuit of individual self-interest that is not good for social efficiency leading to a long term depletion of a commonly owned resource

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16
Q

What is an externality?

A

The spill-over effects from production or consumption for which there is no appropriate compensation paid or received

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17
Q

What is a private cost?

A

The costs faced by the producers or consumers directly involved in a transaction

18
Q

What is a private benefit?

A

The benefits for the producers and or consumers directly involved in a transaction

19
Q

What is the social cost?

A

private costs + external costs

20
Q

What is the social benefit?

A

private benefit + external benefit

21
Q

When does a negative externality exist?

A

private > social

22
Q

When does a positive externality exist?

A

social > private

23
Q

What is a negative externality in production?

A

MPC > MSC

24
Q

What is a negative externality in consumption?

A

MPB > MSB

25
Q

What are the government solutions for market failure?

A

Taxation, subsidising alternatives, trade rights, minimum price and banning

26
Q

What is a positive externality?

A

3rd party spillover benefits

27
Q

What is a value judgement?

A

A normative statement/ opinion

28
Q

What is the free market?

A

The market running without government intervention

29
Q

What is a positive externality in consumption?

A

MSB > MPB

30
Q

What is a positive externality in production?

A

MSC > MPC

31
Q

What is a merit good?

A

A good/service the government feels people under-consume

32
Q

What is regulation?

A

application of law by government or regulatory agencies for various economics-related purposes

33
Q

What is occupational immobility?

A

Difficulty moving from type of work to another (skills/abilities not transferable)

34
Q

What is geographical immobility?

A

Difficulty moving from one area to another (location)

35
Q

What is structural unemployment?

A

When there are significant changes in the pattern of employment in the economy

36
Q

What is persistent relative poverty?

A

Long term unemployment damaging lifetime earnings and areas with low mobility being more likely to suffer economic deprivation

37
Q

What is a pure monopolist?

A

A single seller in a market (tends to happen when industry is state owned)

38
Q

What is a working monopoly?

A

When a firm in a market has more than 25% of the total sales

39
Q

What is a dominant monopoly?

A

When a firm in the market has more than 40% of total sales

40
Q

What is an opipology?

A

When there is the existence of several dominant firms in the market

41
Q

What is a duopoly?

A

When two firms take the majority of demand

Micro 1 (8 decks)

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