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ECON 101 > Untitled Deck > Flashcards

Untitled Deck Flashcards

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1
Q

absolute advantage

A

the ability to do a task using fewer inputs

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2
Q

absolute poverty

A

the measure of the adequacy of resources relative to an absolute standard of living

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3
Q

cap and trade

A

a quantity regulation implemented by allocating a fixed number of permits, which can then be traded

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4
Q

club good

A

a good that is excludable, but non-rival in consumption

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5
Q

coase thereom

A

if bargaining is costless and property rights are clearly established and enforced, then externality problems can be solved by private bargains

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6
Q

common resources

A

a good that is rival and also nonexcludable

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7
Q

comparative advantage

A

the ability to do a task at a lower oppurtunity cost

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8
Q

consumer surplus

A

the economic surplus you get from buying something (consumer = marginal surplus - price)

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9
Q

corrective subsidy

A

a subsidy designed to induce people to take account of the positive externailities they cause

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10
Q

corrective tax

A

a tax designed to induce people to take account of the negative externailities they cause

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11
Q

cost-benefit principle

A

costs and benefits are the incentives that shape decisions. you should evaluate the full set of costs and benefits of any choice, and only pursue those whose benefits are at least as large as their costs

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12
Q

deadweight loss

A

how far economic surplus falls below the efficient outcome (deadweight loss = economic surplus at the efficient quantity - actual economic surplus)

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13
Q

derived demand

A

the demand for an input derives from the demand for the stuff that input produces

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14
Q

diminishing marginal utility

A

each additional dollar yields a smaller boost to your utility (that is, less marginal utility) than the previous dollar)

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15
Q

distributional consequences

A

who gets what

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16
Q

domestic demand curve

A

shows the quantity of a good that all domestic consumers added together plan to buy, at each price

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17
Q

domestic supply curve

A

shows the quantity of a good that all domestic suppliers added together plan to sell, at each price

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18
Q

economic efficiency

A

an outcome is more economically efficient if it yields more economic surplus

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19
Q

economic surplus

A

the total benefit minus total costs flowing from a decision. it measures how much a decision has improved your well-being

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20
Q

effective marginal tax rate

A

the amount of each extra dollar you can earn that you lose to higher taxes and lower government benefits

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21
Q

efficient allocation

A

allocating goods to create the largest economic surplus, which requires that each good goes to the person who’ll get the highest marginal benefit from it

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22
Q

efficient outcome

A

the efficient outcome yields the largest possible economic surplus

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23
Q

efficient production

A

producing a given quantity of output at the lowest possible cost, which requires producing each good at the lowest marginal cost

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24
Q

efficient quantity

A

the quantity that produces the largest possible economic surplus

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25
Q

equity

A

an outcome yields greater equity if it results in a fairer distribution of economic benefits

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26
Q

export

A

to sell goods or services to foreign buyers

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27
Q

external benefit

A

a benefit occuring to bystanders

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28
Q

external cost

A

a cost imposed on bystanders

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29
Q

externality

A

a side effect of an activity that affects bystanders whose interests aren’t taken into account

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30
Q

free-rider problem

A

when someone can enjoy the benefits of a good without bearing the costs

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31
Q

gains from trade

A

the benefits that come from reallocating resources, goods, and services to better uses

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32
Q

globalization

A

the increasing economic, political, and cultural integration of different countries

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33
Q

government failure

A

when government policies lead to worse outcomes

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34
Q

import

A

to buy goods or services from foreign sellers

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35
Q

import quota

A

a limit on the quantity of a good that can be imported

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36
Q

income

A

the money you receive in a period of time, such as a year

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37
Q

income effect

A

measures how people’s choices change when they have more income. a higher wage increases your income, leading you to choose more leisure and hence less work

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38
Q

income taxes

A

taxes collected on all income, regardless of its source

39
Q

interdependence principle

A

your best choice depends on your other choices, the choices others make, developments in other markets, and expectations about the future. when any of these factors changes, your best choice might change.

40
Q

intergenerational mobility

A

the extent to which the economic status of children is independent of the economic status of their parents

41
Q

internal markets

A

markets within a company to buy and sell scarce resources

42
Q

knowledge problem

A

when knowledge needed to make a good decision is not available to the decision maker

43
Q

labour supply

A

the time you spend working in the market

44
Q

marginal external benefit

A

the extra external benefit occuring to bystanders from one extra unit

45
Q

marginal external cost

A

the extra cost imposed on bystanders from producing one extra unit

46
Q

marginal principle

A

decisions about quantities are best made incrementally. you should break “how many” questions into a series of smaller, or marginal decisions, weighing marginal benefits and marginal costs

47
Q

marginal private benefit

A

the extra benefit enjoyed by the buyer from one extra unit

48
Q

marginal private cost

A

the extra cost paid by the seller from producing one extra unit

49
Q

marginal product of labour

A

the extra production that occurs from hiring an extra worker

50
Q

marginal revenue product

A

measures the marginal revenue from hiring an additional worker. the marginal revenue product is equal to the marginal product of labour multiplied by the price of that product

51
Q

marginal social benefit

A

all marginal benefits, no matter who gets them = Marginal private benefit + marginal external benefit

52
Q

marginal social costs

A

all marginal costs, no matter who pays them = marginal private cost + marginal external cost

53
Q

marginal utility

A

the additional utility you get from one extra dollar

54
Q

market failure

A

when the forces of supply and demand lead to an inefficient outcome

55
Q

means-tested

A

eligibility is based on income and sometimes wealth

56
Q

negative externailty

A

a side effect that harms bystanders

57
Q

nonexcludable

A

when someone cannot be easily be excluded from using something

58
Q

nonrival

A

a good for which one person’s use doesn’t subtract from another’s

59
Q

normative analysis

A

prescribes what should happen, which involves value judgements

60
Q

opportunity cost

A

the true cost of something is the next best alternative you have to give up to get it

61
Q

permanent income

A

your average lifetime income

62
Q

positive analysis

A

descibes what is happening, explaining why, or predicting what will happen

63
Q

positive externality

A

a side effect that benefits bystanders

64
Q

poverty line

A

an income level, below which a family is defined to be in poverty

65
Q

poverty rate

A

the percentage of people whose family income is below the poverty line

66
Q

prediction markets

A

markets whose payoffs are linked to whether an uncertain event occurs

67
Q

producer surplus

A

the economic surplus you get from selling something (producer surplus = price - marginal cost)

68
Q

progressive tax

A

a tax where those with more income tend to pay a higher share of their income in taxes

69
Q

public good

A

a nonrival good that is nonexcludable and hence subject to the free-rider problem

70
Q

rational rule

A

if something is worth doing, keep doing it until your marginal benefits equal your marginal costs

71
Q

rational rule for buyers

A

buy more of an item if the marginal benefit of one more is greater than (or equal to) the price

72
Q

rational rule for employers

A

hire more workers if the marginal revenue product is greater than (or equal to) the wage

73
Q

rational rule for markets

A

produce more of a good if its marginal benefit is greater than (or equal to) the marginal cost

74
Q

rational rule for sellers

A

sell one more item if the marginal revenue is greater than (or equal to) marginal cost

75
Q

rational rule for sellers in competitive markets

A

sell one more item if the price is greater than (or is equal to) the marginal cost

76
Q

rational rule for society

A

produce more of an item if its marginal social benefit is greater than (or equal to) the marginal social cost

77
Q

rational rule for workers

A

work one more hour as long as the wage is at least as large as the marginal benefit of another hour of leisure

78
Q

regressive tax

A

a tax where those with less income tend to pay a higher share of their income on the tax

79
Q

relative poverty

A

a measure that compares poverty relative to the material living standards of your contemporary society

80
Q

rival good

A

a good for which your use of it comes at someone else’s expense

81
Q

social insurance

A

government provided insurance against bad outcomes such as unemployment, illness, disability, or outliving your savings

82
Q

social safety net

A

the cash assistance, goods, and services provided by the government to better the lives of those at the bottom of the income distribution

83
Q

socially optimal

A

the outcome that is most efficient for society as a whole, including the interests of buyers, sellers, and bystanders

84
Q

specialization

A

focusing on specific tasks

85
Q

substitution effect

A

measures how people respond to a change in relative prices. a higher wage increases the returns to work relative to leisure, leading you to work more

86
Q

tariff

A

a tax on imported products

87
Q

trade costs

A

the extra costs incurred as a result of buying or selling internationally, rather than domestically

88
Q

tragedy of the commons

A

the tendency to overconsume a common resource

89
Q

utilitarianism

A

the political philosophy that government should try to maximize total utility in society

90
Q

utility

A

your level of well-being

91
Q

voluntary exchange

A

buyers and sellers exchange money for goods only if they both want to

92
Q

wealth

A

all the assets - including savings, cars, a home - that you currently have

93
Q

world price

A

the price that a product sells for in the global market

ECON 101 (1 decks)

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