Tax, Subsidy, Externality
When a good’s production or consumption creates costs for people who aren’t directly involved in the market, economists call it this.
What is a negative externality?
This is a tax on imported goods
What is a tariff?
This type of advantage is based on which producer has the lower opportunity cost.
What is comparative advantage?
Which of the following is a private good?
a) A slice of pizza
b) National defense
c) A city park on a busy weekend
d) A lighthouse
What is a slice of pizza?
This market structure is characterized by many firms selling identical products and no barriers to entry.
What is perfect competition?
This government policy increases the benefit to consumers or producers, often used to encourage positive externalities like education or vaccines
What is a subsidy?
When a country buys goods and services produced in other nations, it’s engaging in this type of trade.
What is imports?
This type of advantage is based on which producer can produce more output with the same amount of resources.
What is absolute advantage?
A public good is defined as a good that is:
a) Rival and excludable
b) Nonrival and excludable
c) Rival and nonexcludable
d) Nonrival and nonexcludable
What is nonrival and nonexcludable?
This market structure consists of many firms selling similar but slightly different products?
What is monopolistic competition?
When the government subsidizes a good, the supply curve shifts in this direction, lowering the market price and increasing quantity
What is to the right?
When a country sells domestically produced goods and services to buyers in other countries, it’s engaging in this type of trade.
What is exports?
Country A can produce 10 cars or 20 computers per day.
Country B can produce 5 cars or 15 computers per day.
This country has absolute advantage in producing cars.
Who is Country A?
A private beach resort charges an entry fee, but once inside, there’s plenty of space for everyone. What type of good is this?
a) Private good
b) Common resource
c) Club good
d) Public good
What is a club good?
This market structure is dominated by a few large firms that are interdependent in their pricing decisions
What is an oligopoly?
This occurs when the production or consumption of a good creates benefits for people who are not directly involved in the market, such as public parks and planting trees.
What is a positive externality?
This is the formula for calculating government revenue when a tariff is imposed.
Country A can produce 10 cars or 20 computers per day.
Country B can produce 5 cars or 15 computers per day.
This country has comparative advantage in producing computers.
Who is Country B?
Which of the following is a common resource:
a) A public hiking trail that becomes crowded on weekends
b) A Netflix subscription
c) A concert in a private arena
d) National weather forecasts
What is a public hiking trail that becomes crowded on weekends?
This market has the most barriers to entry
What is a monopoly?
When a good’s demand is highly inelastic, this group bears the larger share of the tax burden.
Who are the consumers?
This is the name for the loss in total surplus that occurs when tariffs generate government revenue.
What is deadweight loss?
Country X can produce 100 cars or 200 computers per day.
Country Y can produce 80 cars or 160 computers per day.
This country has comparative advantage in computers.
Who is neither!!
Which government policy would best address a tragedy of the commons problem?
a) Subsidizing production of the good
b) Imposing a tax or quota to limit use
c) Making the good freely available to everyone
d) Encouraging more consumers to use it
What is imposing a tax or quota to limit use?
In this market, firms have the least control over price
What is perfect competition?