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Econ 333 > Semester > Flashcards

Semester Flashcards

1
Q

Discount Rate

A

Rate for calculating present value (PV) r = DR

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2
Q

Present Value Formula

A

X/(1+r)

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3
Q

Present Value

A

The current value of future benefits ($1.10 in year is worth $1 today)

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4
Q

First Equimarginal Principle

A

SNB are maximized when SMB from allocation equal social MC

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5
Q

2nd Equimarginal Principle

A

Cost of certain outcomes when MC is the same for all participants

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6
Q

Optimal Outcome

A

Define optimal stock and rate

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7
Q

Net Benefits

A

Area under the demand curve above the supply curve

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8
Q

Criteria in decision making

A

If B>C then support the action.

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9
Q

Public Goods

A

Consumption is both nonexclusive and indivisible

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10
Q

Common Pool Resources

A

Shared resources that are nonexclusive and divisible

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11
Q

External Benefits

A

Positive externalities

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12
Q

DWL of Positive Externalities

A

Area between Market Quantity and Social optimum and below Marginal Social Benefit and above MC

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13
Q

External Cost

A

Negative Externalities

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14
Q

DWL Negative Externalities

A

Below Marginal Social Cost and Above Demand; in-between Social Optimum and Market Quantity

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15
Q

Enforceability

A

Secure from involuntary seizure or encroachment from others

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16
Q

Transferability

A

All property rights should be transferable to other owners voluntarily

17
Q

Exclusivity

A

All benefits and costs accrued as a result of ownership accrue solely to the owner

18
Q

Property Rights

A

Entitlements defining owners rights, privileges, and limitations

19
Q

Producer Surplus

A

Area below Price curve and the Supply Curve

20
Q

Consumer Surplus

A

Area above Price curve and below Demand Curve

21
Q

Common Pool Resources

A

Shared resources managed publicly

22
Q

Negative Externalities DWL

A
23
Q

Positive Externalities DWL

A

Econ 333 (1 decks)

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