Specialization & Trade
What you must give up in order to get something else.
What is opportunity cost?
A market with only one seller.
What is a monopoly?
If a given elasticity is less than this number, it is said to be inelastic.
What is one?
When suppliers may not legally charge the equilibrium price, the government has imposed this.
What is a binding price ceiling?
Hamilton raised the price of tickets to their show to $800. Tickets sold out quickly and many were resold at higher prices on the secondary market. This describes the relationship between Quantity Supplied and Demanded in the original Hamilton ticket market.
What is a shortage?
The ability to produce a good using fewer inputs than another producer.
What is absolute advantage?
All else being equal, the quantity demanded of a good falls when the price of that good rises.
What is the law of demand?
The point where total revenue is maximized.
What is the point where the price elasticity of demand is equal to one?
The graphical relationship between the tax rate and tax revenue, which shows that tax revenue first rises with the tax rate, then falls.
What is the Laffer Curve?
Three economists, including the author of your text, wrote an op ed article called "the conservative case for climate action" detailing their plan to curb climate change and calling for a $40 per ton tax on carbon. Their economic argument builds off this chapter/topic in your textbook.
What is an externality?
A graph showing the combinations of output that can be produced using available technology, factors of production, and inputs.
What is the production possibilities frontier?
The difference between willingness to pay and what is actually paid.
What is consumer surplus?
The formula for price elasticity of demand.
What is percentage change in quantity demanded over percentage change in price, or dQ/dP*(P/Q)?
Benefits that society no longer receives when mutually beneficial trades do not happen, or, the cost to society of allowing trades that harm bystanders to occur.
What is Deadweight-Loss?
In the past year, Congress passed a tax cut and increased spending while the FED raised interest rates through Monetary Policy. If your primary concern for the future was inflation, which group this group is taking policy actions that you would support.
What is the FED?
A tariff raises the price of a good above the world price. As the price rises, these economic actors benefit.
Who are domestic suppliers of that good?
The characteristics of a perfectly competitive market.
What are identical goods, a sufficiently large number of buyers and sellers such that they are "price takers", and free entry and exit. (And perfect information.)
The determinant of economic tax incidence.
What is the relative price elasticities of supply and demand at the market equilibrium?
These types of taxes can internalize the social cost of market decisions, reducing deadweight loss.
What are Pigovian taxes?
In 2017 the Atlantic ran an article titled "America's Monopolies are Holding Back the Economy." This shaded area in the monopoly model helps you make this case.
What is dead weight loss?
The domestic price of a good represents this.
What is the opportunity cost of producing that good domestically?
The five shifters of demand.
What are income, number of buyers, expectations, prices of related goods, and tastes.
The determinants of price elasticity of demand.
What are: availability of substitutes, necessities vs. luxuries, the definition of the market, and the time horizon?
A private market is not a good mechanism to provide public goods because they are these two things.
What are nonrival and nonexcludable?
Lawmakers in Hawaii, Illinois, Minnesota, New Jersey and Washington state have considered pro-rent control bills in the last two years. This is the primary effect of rent control.
What is a shortage of housing (also accept lower investment in quality)?