6.1-2
this is maximized when a market is efficient
total surplus
What type of good is voting?
public good
Who created Pigouvian subsidies and taxes?
Arthur Pigou
A Gini Coefficient close to this number means more income inequality.
1
The socially efficient quantity is where these two curves intersect.
MSC and MSB
What is the marginal cost of goods that are non-rival in consumption?
0
What type of tax should be used to correct a negative externality?
Per-unit Tax
The Lorenz Curve compares actual income distribution to this ideal.
perfect equality
Exists when there are inefficiencies in a market.
deadweight loss
What is the term for an inefficiency of a resource that stems from the overconsumption of common resources?
tragedy of the commons
At what price should the government regulate the production of a natural monopoly?
Where P=ATC
This tax takes a larger percentage from low-income earners.
regressive
overproduce, underproduce
What type of inefficiency do artificially scarce goods suffer from?
inefficiently low consumption
What is the term for a tax on pollution designed to correct an overproduction caused by negative externalities?
emissions tax
Higher wages/benefits offered to workers in dangerous or unpleasant jobs are called this.
Compensating differentials
These are the two forms of asymmetric information that can cause inefficiencies.
adverse selection, moral hazard
What are the three ways to induce people who use common resources to internalize the costs imposed on society?
taxes, tradeable licenses, assign property rights
Suppose at the current market price the marginal private cost of a perfectly competitive firm is $56 and the marginal social cost is $74. Should a pigouvian tax or subsidy be used and of what size?
Pigouvian Tax, $18
A person with a full-time job but no health insurance faces this economic condition.
economic insecurity