Show:
Economic Regulation
Goods & Government
Resources & Regulation
Income
International Trade
100
Economic regulation aims to control _________, ________, ________, and _________ in industries where monopoly seems inevitable or desireable
Economic regulation aims to control price, output, entry of new firms and quality of service in industries where monopoly seems inevitable or desirable
100
Rival and Exclusive
Private Goods
100
Give an example of an open-access good.
Fish in the sea, Christmas trees
100
Give three factors that effect household income
Education, ability, number of workers in the household, experience, single parents
100
A tariff is ____
A tariff is a tax on imports
200
Creates the most social efficiency but an economic loss to the firm. Will require a government subsidy.
Setting price equal to marginal cost
200
Rational Ignorance is ___________. Provide an example.
the frame of mind adopted by voters when the cost of fighting (for or against) legislation exceeds the benefits received. - "not worth fighting"
200
True or False: Automobile emissions create more pollution than consumer products and manufacturing combined.
False - Automobine emissions create emissions equal to consumer products at 40% each. Manufacturing creates an additional 15%
200
What is the poverty level per person per day in the US? Internationally?
$15.79 per person per day in the US, $2 per person per day internationally
200
Give three similarities of tariffs and quotas
Higher price, lower quantity demanded, loss of consumer surplus, gain of producer surplus, lower economic welfare (because of higher prices)
300
Looks at the behavior and market structure to determine if a firm acted unreasonably
What is the Rule of Reason
300
Give an example of Rent Seeking
any situation where an industry tries to influence legislation for their benefit.
300
The level of Socially efficient production is found where
Demand = Marginal Cost
300
What is excluded from money income?
In-kind transfers
300
NAFTA is an agreement between what three countries? What does NAFTA do?
The US, Canada, Mexico. NAFTA prevents trade restrictions on the flow of goods between these countries.
400
Tying contracts require
Tying contracts require the buyer of one good to purchase another good (ex - $99 iPhone with agreement to purchase phone service for 2 years)
400
Distribution of benefits are concentrated and the distribution of costs are widespread. This is _________ legislation
special interest legislation
400
To cut emissions with fixed-production technology you must ___________. To cut emissions with variable-production technology you must ___________. Which is cleaner?
To cut emissions with fixed-production technology you must cut production. To cut emissions with variable production technology you must alter the production process. Variable production technology is cleaner.
400
The Lorenz curve shows ____________.
The Lorenz curve shows the distribution of incomes over time compared to an equal distribution line. The more curved the line is, the less evenly distributed incomes are.
400
Explain three of the five arguments in favor of trade restriction
National Defense - the domestic industry's output is vital to national defense. Infant Industry - you must protect emerging domestic industries. Antidumping - selling a product for less abroad than in the home market will destroy economic value. Jobs - Protect domestic jobs by protecting their industries. Declining industries - protecting industries helps to lessen shocks to the economy.
500
These actions are always per se illegal under the Clayton Act of 1914
Price Setting, Restricting output, interlocking directorates
500
Explain why bureaus are inefficient.
1. No incentive to decrease costs or increase output. 2. Incentive to spend entire budget. 3. No incentive to be efficient. 4. Little feedback received/no incentive to act on feedback.
500
Marginal Social Cost is equal to
marginal private cost + marginal external cost
500
Social insurance programs _________
Help to make up for lost income of people who worked but are now retired, unemployed, or unable to work because of injury.
500
Explain why trade restrictions are inefficient.
Protecting one stage of production will require protection in other stages - the industry will never be able to compete on its own. The cost of protection (rent seeking) leads to consumer welfare loss. The cost of enforcing restrictions leads to lost revenue by creating black markets. Protection from competition will allow industries to be less efficient and less innovation (ultimately bad for the consumer).