Efficiency
This idea centers on the fact that the consumer ultimately has the power to decide what they want to buy, and thus, determine what is produced.
What is Consumer Sovreignty?
Too much of a good is being produced, thus hurting society. This is an example of what?
What is a Negative Externality?
This type of "fee" (also called a pollution tax) is designed to raise costs for a producer in order to reduce supply for that good... thus fixing a negative externality.
What is an Effluent Fee?
Government _______ Goods are goods that have been deemed as desirable throughout the political process.
What is "Sponsored?"
What are Government Sponsored Goods?
These give an individual the right to own, use, and exchange property as they please.
What are Property Rights?
Economic Efficiency can only be reliably obtained through ______, which is a key feature of a market economy. It is also what we are engaging in right now!
What is Competition?
Producing more of this good ends up helping society. What is this an example of?
What is a Positive Externality?
This essentially functions as the opposite of a tax; the government pays you to make something!
What is a Subsidy?
Government _______ Goods are goods that have been deemed as UNdesirable throughout the political process.
What is "Inhibited?"
What are Government Inhibited Goods?
This series of economic regulations, championed by FDR in the 1930s, helped to stimulate the economy during the Great Depression.
What is the New Deal?
When too few resources OR too many resources go toward a specific economic activity, it is called this:
What is a Market Failure?
When an economic activity spills over to affect a third party, it creates these:
What are Externalities?
This is the simple concept of the government stepping in and saying, "You have to do this!" This can be applied to correct both Positive and Negative Externalities.
What is Regulation?
These types of *money* payments are made by the government to individuals, for which nothing is paid back in return (think Social Security or Unemployment Insurance).
What are Transfer Payments?
This type of good is both non-rival in consumption and non-excludable. An example of this is a streetlight.
What is a Public Good?
This type of efficiency is found when P = MC (price equals marginal cost).
What is Allocative Efficiency?
The type of externality pictured here (see slides):
What is a Negative Externality?
Subsidies, government financing + production, and regulations are all ways of correcting this type of error (we want people to benefit!).
What are Positive Externalities?
This system is paid for by the government, and covers the medical bills for US citizens aged 65+.
What is Medicare?
(Not to be confused with Medicaid!)
This specific type of legislation prevents businesses form engaging in monopolistic activity.
What is Antitrust Legislation?
This type of efficiency is found when P = Minimum ATC (price equals minimum average total costs).
What is Productive Efficiency?
The type of externality pictured here (see slides):
What is a Positive Externality?
Special taxes toward businesses and government regulation are two methods of correcting this type of error (we want you to make less of this!).
What are Negative Externalities?
These types of payments in the form of *goods and services* are paid by the government to individuals without payment in return (Medicare is an example of this).
What are Transfers in Kind?
This "problem" occurs when people assume others will pay for a public good, and thus use the public good for free.
What is the "Free Rider" problem?