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Marknaden - priser, konsumenter och företag > modul 8 > Flashcards

modul 8 Flashcards

1
Q

Economists assume that people act as if they have __ in their heads with which to draw marginal benefit and marginal cost curves.

A

numerical scales

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2
Q

The additional benefit and the additional cost of another unit of the activity are considered at the _

A

margin

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3
Q

Models in economic analysis are different from the ______ world.

A

real

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4
Q

How can the marginal decision rule be used to determine the quantity of an activity that maximizes net benefit?

A

By finding the point where marginal benefit equals marginal cost, the quantity of an activity that maximizes net benefit can be determined.

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5
Q

What is net benefit and how is it calculated?

A

Net benefit is the difference between total benefit and total cost. It is calculated by subtracting the total cost from the total benefit.

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6
Q

How do consumers and firms maximize net benefit?

A

By evaluating each activity at the margin and considering the additional benefit and cost of another unit

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7
Q

What is the concept used to determine the quantity of an activity that maximizes net benefit?

A

Marginal benefit

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8
Q

What is the relationship between marginal benefit and marginal cost?

A

They can be equal or marginal benefit can be greater than marginal cost.

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9
Q

What is the maximization assumption made by economists in explaining consumer and firm behavior?

A

Consumers and firms always maximize their profits

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10
Q

What are the concepts of marginal benefit and marginal cost?

A

Marginal benefit is the additional benefit gained from consuming or producing one more unit of a good or service, while marginal cost is the additional cost incurred from consuming or producing one more unit of a good or service.

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11
Q

How can the concepts of marginal benefit and marginal cost be applied to understand the marginal decision rule?

A

The marginal decision rule states that individuals should continue consuming or producing a good or service as long as the marginal benefit exceeds the marginal cost.

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12
Q

What is the net benefit of an activity?

A

The total benefit of the activity minus its opportunity cost

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13
Q

Models in economic analysis are simplified representations of the __ world.

A

real

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14
Q

What assumption do economists make when explaining consumer and firm behavior?

A

People act as if they have numerical scales in their heads to draw marginal benefit and marginal cost curves.

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15
Q

How is net benefit calculated?

A

Net benefit is calculated by subtracting the total cost of an activity from its total benefit.

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16
Q

What assumption do economists make about consumer and firm behavior?

A

Consumers seek to maximize utility and firms seek to maximize economic profit

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17
Q

The marginal cost curve for an activity rises as the ______ marginal benefits are likely to be.

A

forgone

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18
Q

What is the relationship between total benefit and marginal benefit?

A

Total benefit is always greater than marginal benefit

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19
Q

The free rider problem occurs with _ goods, where individuals can benefit from the good without contributing to its production.

A

public

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20
Q

What are the conditions that may lead to market failure?

A

External costs and benefits

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21
Q

What is the concept of market failure?

A

The inability of the market to allocate resources efficiently

22
Q

The conditions that may lead to market failure can _

A

vary

23
Q

What is the role of government intervention when external costs and benefits are present?

A

Government intervention is necessary to address external costs and benefits by implementing regulations, taxes, subsidies, or other policies to internalize the externalities and ensure efficient allocation of resources.

24
Q

What is a free rider?

A

A person or firm that consumes a public good

25
Q

What is an external cost?

A

A cost imposed on others outside of any market exchange

26
Q

What conditions may lead to market failure?

A

Market failure may occur if markets are not competitive or if property rights are not well defined and fully transferable.

27
Q

Why is a common property resource unlikely to be allocated efficiently in the marketplace?

A

Because the cost of an extra household is zero

28
Q

What is an external benefit?

A

A benefit imposed on others outside of any market exchange

29
Q

What are external costs and benefits?

A

External costs are costs imposed on third parties as a result of an economic activity, while external benefits are benefits received by third parties as a result of an economic activity.

30
Q

What are free riders?

A

People or firms that consume a public good without paying for it

31
Q

What is the difference between private goods and public goods?

A

Private goods are excludable and rivalrous, meaning they can be owned and consumed exclusively by individuals. Public goods are non-excludable and non-rivalrous, meaning they are available to everyone and consumption by one individual does not reduce availability to others.

32
Q

External costs occur when firms generate costs that are not reflected in their _ costs.

A

private

33
Q

What is market failure?

A

A situation where the market is unable to allocate resources efficiently

34
Q

What is a public good?

A

A good for which the cost of exclusion is prohibitive and for which the marginal cost of an additional user is zero

35
Q

What are examples of public goods?

A

Examples of public goods include national defense, law enforcement, fire protection, and efforts to preserve endangered species.

36
Q

______ goods are rivalrous and excludable

A

private

37
Q

A government agency may impose limits on the killing of an animal or destruction of its habitat to prevent the excessive ______ of a common property resource.

A

private use

38
Q

What is utility in economics?

A

The satisfaction or happiness that a consumer derives from consuming a good or service

39
Q

What is the difference between total utility and marginal utility?

A

Total utility measures the total satisfaction from consuming all units of a good, while marginal utility measures the satisfaction from consuming one additional unit of a good

40
Q

What is total utility?

A

The number of units of utility gained from consuming a given quantity of a good

41
Q

Utility is defined as the __ derived from consuming a good or service

A

satisfaction

42
Q

What is the definition of utility in economics?

A

Utility in economics refers to the satisfaction or happiness that a consumer derives from consuming a good or service.

43
Q

What is the utility-maximizing condition?

A

The utility-maximizing condition is when a consumer allocates their income in a way that the marginal utility per dollar spent is equal for all goods and services.

44
Q

What is the relationship between total utility and quantity consumed?

A

Total utility increases at a decreasing rate as quantity consumed increases

45
Q

Goods must be ______ in order to apply the marginal decision rule to utility maximization.

A

divisible

46
Q

What are the limitations of measuring utility?

A

Measuring utility is subjective and varies from person to person. It is also difficult to quantify utility numerically.

47
Q

Utility is maximized when total outlays equal the ______ available.

A

budget

48
Q

What is the relationship between marginal utility and quantity consumed?

A

Marginal utility decreases as quantity consumed increases

49
Q

The marginal decision rule states that an activity should be expanded if its marginal benefit exceeds its ______.

A

marginal cost

50
Q

______ is the amount by which total utility rises with consumption of an additional unit of a good, service, or activity.

A

Marginal utility

51
Q

What is the law of diminishing marginal utility?

A

The law of diminishing marginal utility states that as a consumer consumes more units of a good, the additional satisfaction or utility derived from each additional unit decreases.

52
Q

According to the reading, what is utility in economics?

A

The measure of how much a consumer enjoys consuming a good or service

Marknaden - priser, konsumenter och företag (14 decks)

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