Supply/Demand
What is the relationship between price and quantity demanded for a demand curve?
Inverse
What is a cartel?
An agreement between firms in an oligopoly to coordinate their actions to act as a single firm and restrict output in order to maximize total profits.
What is rent seeking?
When an individual seeks to gain wealth without making any contribution to the benefit of society.
What is the demand curve for a firm?
Horizontal
What are beneficial externalities referred to as?
Positive
What is equilibrium?
The point where supply and demand curves in a mark intersect.
What is the difference between a monopoly and oligopoly?
One seller vs a few sellers
What is the effect of taxes on a market concerning surplus?
Total surplus decreases which leads to deadweight loss
Economic costs include what?
Opportunity costs
what degree of rivalry and excludability do private goods have?
High, high
What is it called when supply exceeds demand (above equilibrium)?
Surplus
Name at least one barrier to entry.
High fixed costs, government, key resource ownership
What can the government do to create barriers to entry?
By giving intellectual rights
What is the price elasticity for goods with broader market definitions ?
Inelastic
List at least three shifters of demand (bonus for the fourth or if you can name at least two types of goods).
prices of related goods, tastes, expectations, number of buyers
Where do monopolies supply at?
MR=MC
How can governments offset the costs of externalities?
By creating taxes/subsidies or setting quotas
Maddie makes $600 in revenue from her bread business. She pays $200 in rent, $50 in wages, and $100 for equipment. She could be making $150 in another business venture. What is her total profit?
$100
What does Coase Theorem state?
For Coase Theorem to apply, property rights must be clearly defined and negotiation must be possible.
If supply shifts to the left, what happens to equilibrium price and quantity? (extra points if you can name what this scenario is called)
EP increases, EQ decreases ; stagflation
Which type of monopoly can governments regulate?
Natural monopolies
What starts to occur for firms when marginal revenue exceeds marginal costs and what is this called?
They lose profit ; diminishing returns to scale