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AP Microeconomics > Unit 6 > Flashcards

Unit 6 Flashcards

1
Q

private good

A

not produced by gov

  1. Rivalry
  2. Excludability
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2
Q

public good

A

produced by gov

  1. non-rivalry
  2. non-excludability
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3
Q

effciency losses in public goods

A

MB>MC

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4
Q

quasi-public goods

A

underproduced by private sector, benefit beyond individulal buyers (education, police, etc)

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5
Q

gov expenditure

A
  1. purchases (exhaustive)

2. transfer payments

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6
Q

transfer payments

A

nonexhuastive (don’t create, SS or welfare)

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7
Q

propietary income

A

lottery, tolls

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8
Q

spending

A
  1. pensions
  2. defense
  3. healthcare
  4. interest
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9
Q

revenue

A
  1. personal income tax
  2. Corporate tax
  3. payroll tax
  4. sales + excise tax
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10
Q

deductions

A

donations, mortage, etc

*marg tax rate is highest paid > find AVG tax rate

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11
Q

corporate tax

A

on profit, old (35%) v new(20-25%), progressive

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12
Q

payroll tax

A

taken out of paycheck, regressive

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13
Q

FICA

A

social security+medicare, proportional

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14
Q

sales/excise tax

A

sin tax, proportional

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15
Q

tax burden

A
  1. benefits recieved principle

2. ability to pay principle

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16
Q

benefits recieved principle

A

use service, pay taxes to finance
probs:
1. how gov determine benefits?
2. can’t apply to certain programs

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17
Q

ability to pay principle

A

based on income, how much afforded

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18
Q

progressive

A

income increase, % rate increase (personal income tax)

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19
Q

regressive

A

rate decreases as income increases (sales tax, payroll, property)

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20
Q

proportional

A

same for all (sales, corporate)

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21
Q

tax incidence

A

degree to which tax falls on person

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22
Q

tax elasiticty

A

more demand inelestic = more tax shifted to consumer

elastic = seller takes on

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23
Q

effciency loss

A

DWL, society sacrifice net benefits, greater elasticity=great loss
- taxes may have=revenue not social cost

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24
Q

minimize effciency loss

A

redistributive goals:

  1. taxes redristribute income
  2. reduce negative externalities
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25
Q

anti-trust laws

A
  1. Sherman Antitrust act
  2. Clayton antitrust act
  3. Federal trade commison act
  4. Wheeler lea act
  5. Celler-Kefauver act
26
Q

sherman antitrust act

A

fixing prices, vague, won 1 case

27
Q

clayton antitrust act

A

fix sherman

a) outlaw price discrimination
b) prohibit tying contract
c) eliminate interlocking directorates

28
Q

federal trade commission act

A

send cease orders

29
Q

wheeler lea act

A

stop false advertising

30
Q

Celler-Kefauver act

A

limits mergers

31
Q

court interpretations

A

a) policy on monopolist be behavior/structuralist?

b) how should markets be defined?

32
Q

structuralist

A

’s, too high market share=regulate

33
Q

behavorialist

A

if serves society, allow

34
Q

rule of reason

A

size doesn’t matter, look at intent, carnegie

35
Q

90-60-30 theory

A

90 are, 60 prob, 30 no

loop hole - Du pont cellophane

36
Q

2 perspectives of gov involvement

A
  1. active anti-trust

2. laissez faire (market corrects it)

37
Q

3 types of mergers

A

horizontal, vertical, conglomerate

38
Q

horizontal merger

A

2 comp of same field

39
Q

vertical merger

A

buys manufacturing process

40
Q

conglomerate

A

owns businesses in mult. fields

41
Q

free rider

A

benefits but no contribution, demand down

42
Q

price fixing

A

collusion, per se violation (fines)

43
Q

other anti-trust activities

A
  1. mergers
  2. price fixing
  3. price discrimination
  4. tyingn contract
44
Q

tying contract

A

to get a, must buy b

45
Q

income inequality cause

A
  1. ability
  2. education+training
  3. discrimination
  4. preference+risks
  5. unequal distribution of wealth
  6. market power
  7. luck/connections/misfortunes
46
Q

quintile/lorenz curve

A

Gini ratio 0(equality) - 1(inequality)
problems:
1. income mobility
2. gov. redistribution of income

47
Q

growth of income inequality

A

why?

a. demand of high skill workers
b. demographic change
c. trade/immigration

48
Q

equality efficiency trade-off

A

more income equality comes at cost of lost production/income

49
Q

accuracy of poverty #’s

A
  1. cities (high cost of living)

2. income v consumption

50
Q

entiltlements

A

transfer payments, us income maintenance system

51
Q

social insurance

A

partially replace lost earnings

i. social security
ii. medicare
iii. unemployment

52
Q

public assistance

A

unable to earn income/have dependents

i. supplemental security income (can’t get SS)
ii. temporary assistance for needy families (welfare)
iii. SNAP
iv. Medicaid (people on SSI or TANF)

53
Q

trade deficit

A

import greater than export (china)

54
Q

trade surplus

A

export greater than import (canada)

55
Q

3 types of goods

A
  1. labor intensive
  2. land intensive
  3. capital intensive
56
Q

absolute advantage

A

who produces better

57
Q

comparative advantage

A

who gives up the least

58
Q

terms of trade

A

whats traded to get what you want

59
Q

avg tax %

A

avg tax%= tax/income

60
Q

marginal tax %

A

highest paid

AP Microeconomics (5 decks)

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