Workbook11

Question 1

Mercantilism

Answer 1

The economic philosophy based on the premise that precious metal is wealth. Dominant during the 16th, 17th, and 18th centuries, mercantilist governments increased their gold holdings by restricting imports and subsidizing export industries. (See bullionist and Colbertist)

Question 2

Merger

Answer 2

When 1+1=1, with the remainder going on unemployment.

Question 3

Mergers and Acquisitions

Answer 3

Narrowly viewed in the prism of economic theory, these could be explicit forms of collusion which may be scrutinized by the Antitrust Division of the U.S. Justice Department for evidence of behavior that threatened competitive markets. (See collusion)

Question 4

Meritocracy

Answer 4

A system that distributes wealth to those who contribute that which is most scarce. (See distribution theory)

Question 5

Metaphysics

Answer 5

The brank of philosophy which examines the ultimate existence of things; i.e., what is beyond (Greek: meta=after) physics. Medieval scholars believed that the essential and irreducible constituents of a composite entity were earth, air, fire, and water. Beyond these, the concept of life is explained by the quintessence, or fifth element. (See scholastics)

Question 6

Method

Answer 6

A way, system, or procedure for doing anything. (See methodology)

Question 7

Methodology

Answer 7

Principles of orderly thought; a logic system or thought process. (See method, deductive logic, and inductive logic)

Question 8

Microeconomics

Answer 8

The study of individual markets, prices, and firms. (See macroeconomics and megaeconomics)

Question 9

Minimal Marginal Cost

Answer 9

The inflection point on the total cost function; i.e., the point of diminishing returns.

Question 10

Minimum Average Cost

Answer 10

The capacity point; i.e., an optimal level of production where output cannot be increased without increasing the cost per unit. Where MC=AC. Where the slope of a vector from the origin is equal to the slope of the total cost function.

Question 11

Minimum Price Line

Answer 11

The marginal cost function; the price below which a rational producer will not sell.

Question 12

Minimum Wage

Answer 12

Based on the Fair Labor Standards Act of 1938, the minimum compensation that may be agreed to by employers and employees.

Question 13

Momentary Period

Answer 13

In economics, when the market supply is fixed. (See short run and long run)

Question 14

Monetize

Answer 14

To tie or connect a commodity to money; e.g., a precious metal is monetized when stored (hoarded) to support a currency.

Question 15

Monopoly

Answer 15

Go directly to jail. Do not pass Go. Do not collect $200.

Question 16

Monopsony

Answer 16

A single buyer.

Question 17

MU/P Ratio

Answer 17

Satisfaction per dollar spent. (See marginal utility)

Question 18

MU/P Ratio Standard

Answer 18

The unique MU/P ration an individual consumer requires with each purchase

Question 19

Murphy’s Law

Answer 19

After a mishap at Edwards Air force Base 1949, Capt. Ed Murphy, an engineer, remarked, “If anything can go wrong, it will.”

Question 20

Natural Law

Answer 20

A rule of conduct inherent in man’s nature and is discoverable by reason alone. A law of social science.

Question 21

Necessity

Answer 21

In economics, a good for which the elasticity of demand is less than one. (see luxury)

Question 22

Negative Income Tax

Answer 22

Milton Friedman’s proposal that would replace welfare entitlement programs with automatic payments from the IRS to those with incomes below the poverty line, thereby eliminating unnecessary bureaucracies

Question 23

Neoclassical Economics

Answer 23

A synthesis of classical economics and marginal utility theory with the economic doctrines and paradigms developed from 1874 through 1933. Sometimes called the Cambridge school, this body of thought is based chiefly on the equilibrium theory (the law of supply of demand) of Leon Walras (1834-1910) and the work of Alfred Marshall (1842-1024). Also called Marshallian economics, it includes the concepts of elasticity, consumer surplus, and profit maximization, and adopts mathematical economics as a method of explanation. (See classical economics and mathematical economics)

Question 24

Network Effect

Answer 24

The value of a good or service directly affected by the general popularity of that good or service; e.g., the future sale of fax machines is a function of the number of people that presently own a fax machine, 2: The result of doing lunch with a fellow moron.

Question 25

Normal Good

Answer 25

In demand theory, a good or service which has two characteristics, both of which are necessary conditions: a substitution effect and an income effect.

Question 26

Normal Profit

Answer 26

The amount of accounting profit required to maintain a business without attracting competitors.