Ch. 1-2
all things being equal
satisfaction obtained from acquiring one more unit of a product
marginal utility
extra revenue associated with selling one more unit of output
marginal revenue
free-rider problem
the maximum price you would be willing to pay for a good rather than go without
reservation price
the ability to produce a good at a lower opportunity cost than another producer
comparative advantage
utility-maximizing rule
ratios of marginal utility to price is made equal across goods
characteristics of a monopoly (must get both)
a single firm serves the market; strong barriers to entry
a theorem that states that no system of putting together individual preferences into social decisions will give nonarbitrary results
impossibility theorem
the effect of income influencing how much you are willing to pay for something
the slope of the production possibilities curve
opportunity cost
the change in output from hiring one more unit of labor
marginal product of labor
for a competitive firm, marginal revenue always equals ______
price
the profit maximization rule says to hire workers until...
marginal revenue product = wage
another word for non-price competition
rent seeking behavior
a practice whereby a firm gets services from a third-party provider (this does not affect the net jobs in the economy)
outsourcing
if output increases by a greater percentage than inputs, you have...
increasing returns to scale (economies of scale)
what is the profit-maximizing rule for a competitive firm?
produce where marginal cost equals price
how much money you will make if you hire one more person
Marginal Revenue Product of Labor
what does international trade do to total economic value?
international trade increases economic value
the percentage change in the quantity demanded of one good divided by the percentage change in the price of ANOTHER good
cross-price elasticity of demand
slope of an isocost line
-W/r
how a monopolist sets output and price in order to maximize profits
output is set where MR=MC, price is set based on the demand curve
interest rate that will cause the present value of the proposed capital expenditure to equal the present value of the income stream
internal rate of return
a tariff on imported goods distributes some economic value to the government and increases the economic value received by the...
local producers