Market Structures
Supply and Demand Side Market Failures
Government Intervention in the Market
Formulas
Photo Clues
100
This is the reason why consumers will not pay any portion of an excise tax in the form of a price increase, in a perfectly competitive market.
What is perfectly elastic demand?
100
This term describes any production level beyond or below the socially optimal level of production.
What is deadweight loss?
100
This is a legal maximum price that can be charged for a good or service.
What is a price ceiling?
100
% change in quantity demanded divided by % change in price
What is elasticity of demand?
100
What is a PPC/PPF?
200
In this oligopolistic situation, neither firm has an incentive to change their pricing strategy, because a change would lead to a less desirable outcome.
What is a Nash Equilibrium?
200
In this situation, people who benefit from a good or service, are able to obtain its benefits even if they are unable to pay for it.
What is the free rider problem/a positive externality?
200
This type of tax is meant to decrease production of an undesirable good or service.
What is an excise tax?
200
MUx/Px = MUy/Py
and all income spent
What is the utility maximizing combination?
200
What is perfectly inelastic supply?
300
The Government will be likely to allow this type of firm to operate under price regulation, due to its ability to operate efficiently (think National Grid).
What is a natural monopoly?
300
This is the most common method used to correct a negative externality.
What is an excise tax/tax on production?
300
This type of subsidy will have no effect on quantity, but could cause a firm producing a desirable product to remain in business.
What is a lump sum subsidy?
300
TFC/Q + TVC/Q
What is ATC?
300
q* is known as
What is the profit maximizing quantity of labor?
400
In this situation, there is a single buyer, usually of a specific resource.
What is a monopsony?
400
This describes the difference between MPC and MSC.
What are external costs/spillover costs/negative externality?
400
This type of income tax is meant to redistribute income from higher income earners to lower income earners.
What is a progressive income tax/graduated income tax?
400
MP of labor/P labor = MP capital/P capital
What is the cost minimizing combination of resources (labor and capital)?
400
From Q to Q2 and beyond
What is diseconomies of scale?
500
This is the term used to describe the difference between the quantity sold in monopolistic competition and perfect competition (think unused hotel rooms or restaurant tables).
What is excess capacity?
500
A pure public good has these two characteristics which makes them unlikely to be produced in the private market.
What are non-rivalry and non-excludability?
500
In order to correct the effects of a negative or positive externality, governments attempt to institute policies that equate these two economic measurements.
What are marginal social cost and marginal social benefit?
500
This mathematical term describes the difference between complete income equality and actual income distribution.
What is the Gini Coefficient/Ratio/Index?
500
A quantity of 65 is known as
What is the revenue maximizing quantity/unit elastic demand?