Brainscape's Knowledge GenomeTM

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


See full index

IB economics > Microeconomics knowledge > Flashcards

Microeconomics knowledge Flashcards

1
Q

consequences of price ceilings

A

protecting low-income workers, shortage, non-price rationing, underground markets, welfare loss

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

price ceiling example

A

rent controls, food price controls

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

consequences of price floor

A

supporting producers, surpluses, government measures to dispose of surpluses, welfare loss

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

price floor example

A

minimum wages

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

reasons for government intervention

A

earn revenue for the government, provide support to firms, provide support to households on a low income, influence levels of production or consumption by firms or consumers, correct market failure, promote equity

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

negative production externalities market-based policies

A

indirect taxes, carbon taxes, trade permits

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

negative production externalities non-market-based policies

A

government legislation and regulation, education, international agreements

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

negative consumption externalities policies

A

indirect taxes, government legislation, nudges, education

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

positive consumption externalities policies

A

direct government provision, subsidies, government legislation and regulations, nudges, education

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

positive production externalities policies

A

direct government provision, subsidies

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

adverse selection

A

government regulations, government provision of information, licensure

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

non-price determinants of demand

A

income, preferences of consumers, price of substitute goods, price of complementary goods, number of consumers

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

non-price determinants of supply

A

costs of factors of production, technology, price of related goods (joint supply or competitive supply), taxes and subsidies, number of firms, firm price expectations

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

rational consumer choice assumptions

A

consumer rationality, perfect information, utility maximization

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

consumer choice - biases

A

rules of thumb, anchoring, framing, availability, bounded rationality, bounded self-control, bounded selfishness, imperfect information

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

choice architecture

A

default choice, restricted choice, mandatory choice

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

rational firm business objective

A

profit maximization

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

alternative firm business objectives

A

social corporate responsibility, market share, growth maximization, satisficing

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

determinants of PED

A

number and closeness of substitutes, necessities vs. luxuries, length of time, proportion of income spent on a good

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

determinants of PES

A

length of time, mobility of factors of production, spare capacity of firms, ability to store stocks, rate at which marginal costs increase

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

profit-maximizing level of output

A

MR=MC for all market structures

22
Q

types of profit

A

abnormal, normal, loss

23
Q

reasons for economies of scale

A

specialization of labor and management, bulk buying inputs, financing economies (lower interests for large firms)

24
Q

reasons for diseconomies of scale

A

co-ordination, monitoring, and communication problems, poor worker motivation

25
Q

perfect competition

A
  • large number of firms in the industry
  • undifferentiated (homogenous) products without brand names
  • no barriers to entry
26
Q

monopoly

A
  • a single dominant firm in the industry
  • firm sells unique good or service with no close substitutes
  • high barriers to entry
27
Q

oligopoly

A
  • small number of large firms in the industry
  • products may or may not be differentiated
  • high barriers to entry
28
Q

monopolistic competition

A
  • a fairly large number of small or medium firms in the industry
  • differentiated products
  • no barriers to entry
29
Q

perfect competition basic traits

A

price-taker, perfectly elastic (horizontal demand curve), every firm makes a normal profit in the long run

30
Q

perfect competition other traits

A

allocative efficiency, low prices for consumers, no inefficient firms due to competition, unrealistic assumptions, lack of product variety, cannot take advantage of economies of scale, limited product development

31
Q

monopoly basic traits

A

price-maker, downward sloping demand curve, can make an abnormal profit indefinitely in the long run

32
Q

monopoly other traits

A

allocative inefficiency, high price for consumers, low output, possibly less innovative, negative impacts on the distribution of income, economies of scale

33
Q

barriers to entry

A

economies of scale, natural monopoly, anti-competitive behaviour, branding, legal barriers (patents, licenses, copyrights, tariffs, or quotas)

34
Q

monopolistic competition basic traits

A

price-maker, more elastic demand curve than in monopoly, every firm makes a normal profit in the long run

35
Q

monopolistic competition other traits

A

product differentiation, allocative inefficiency, product variety, both price, and non-price competition

36
Q

product differentiation

A

physical differences, quality differences, location, services, product image

37
Q

oligopolies basic traits

A

price-maker, downward sloping demand curve, can make an abnormal profit indefinitely in the long run

38
Q

oligopolies other traits

A

interdependence (strategic behavior, conflicting incentive- to collude/ to cheat in a collusive agreement), only non-price competition due to prisoner’s dilemma, collusion, allocative inefficiency, higher prices for consumers, low output, possibly less innovative, negative impacts on the distribution of income, economies of scale, product variety

39
Q

types of collusion

A

cartel, informal collusion (price leadership)

40
Q

reasons for collusion

A

gain market power, increase profits, limit competition

41
Q

non-price competition

A

product development, branding, advertising, services

42
Q

abuse of market power

A

unreasonably high prices, artificially low prices…legislation to protect competition (in case of natural monopoly government ownership or government regulations such as average pricing or marginal cost pricing)

43
Q

explanation of the law of demand

A

income effect (if price of good changes, a consumer’s purchasing power increases), substitution effect (if price of a good falls, consumers buys more of now less expensive good)

44
Q

carbon tax advantages

A

internalising the negative externality, incentivise R&D, source of government revenue, easily and quickly adjustable

45
Q

carbon tax disadvantages

A

may hurt poor people, can cause bankruptcies, carbon tax is politically unpopular, companies may relocate their production facilities to other countries (unemployment), requires strong institutions, difficulty in estimating the correct tax price

46
Q

subsidies advantages

A

preventing the long-term decline of industries, lowering prices for consumers (increasing standards of living), increasing employment

47
Q

subsidies disadvantages

A

burdening government budget, worsening resource allocation, producers can become subsidy dependent

48
Q

implications of inelastic PED

A

if PED is inelastic then the firm can increase its revenue by increasing the price per unit, government can make large profits from taxing inelastic goods

49
Q

implications of elastic PED

A

if PED is elastic then the firm can decrease its price to increase revenue, government can significantly decrease consumption of taxed goods even with a lower tax rate

50
Q

short-run

A

a period of time in which at least one factor of production is fixed

51
Q

long-run

A

a period of time in which all factors of production are variable

IB economics (9 decks)

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