Unit (6)
What government intervention can correct a negative externality by making firms pay for the social costs of their actions?
What is a Pigouvian tax?
What is the term for the price at which quantity demanded equals quantity supplied?
What is equilibrium price?
What market structure has many buyers and sellers, homogeneous products, and no barriers to entry?
What is perfect competition?
In what market structure do firms compete by differentiating their products?
Hint: Sunright Tea Studio and Gong-cha Tea are examples of these.
What is monopolistic competition?
In a perfectly competitive labor market, an individual firm’s supply of labor is what?
What is perfectly elastic?
What are the two defining characteristics of a public good?
What are non-excludability and non-rivalry?
What happens to the demand curve when consumer income increases for a inferior good?
What is the demand curve shifts to the left?
The point at which additional units of input result in a lower increase in output is known as what?
What is diminishing marginal returns?
This oligopoly is known as a conglomeration (combination of more than 4 countries that control the world price related to oil)
Abbreviation is acceptable.
What is OPEC?
What is the term for the additional revenue generated by employing one more unit of a resource?
What is marginal revenue product (MRP)?
What does a Gini coefficient of 0 mean?
If the price of a substitute good rises, what happens to the demand for the original good?
What is the demand for the original good increases?
What type of returns to scale occurs when doubling all inputs results in less than double the output?
What is decreasing returns to scale?
This type of behavior in game theory suggests that you cannot make a decision without making the other player worse off.
What is Pareto Efficiency/Optimality?
What term describes the portion of a resource's payment above its minimum supply price, especially prominent in markets for unique, inelastic resources?
What is economic rent?
In an Edgeworth Box, what point represents an allocation where no individual can be made better off without making someone else worse off?
What is a Pareto efficient allocation?
What does positive YED indicate for goods?
What are normal goods?
In the short run, what is a perfectly competitive firm's profit-maximizing condition?
What is where marginal cost (MC) equals marginal revenue (MR)?
What pricing strategy allows a monopolist to charge different prices to different consumer groups based on their willingness to pay?
What is price discrimination?
To minimize costs in production, a firm employing multiple resources should adjust resource usage until what ratio condition is met across all inputs?
What is the Marginal product per dollar spent on each input is equal (i.e: MPl/Pl = MPk/Pk)?
What is the term for a government program that redistributes income to reduce inequality, such as welfare or unemployment benefits?
What is a transfer payment?
Imagine that milk and cereal are complementary goods, what happens to the demand for cereal if the price of milk goes up?
What is the demand decreases?
In a perfectly competitive firm, if the market price is below average variable cost, what should the firm do?
What is shut down rule?
In game theory, what is a strategy that always yields the best outcome for a player, regardless of the opponent’s strategy?
What is dominant strategy?
When drawing a monopsony graph, what is the correct relationship between the marginal resource cost (MRC) curve and the supply curve of labor, and where does the monopsonist set the wage rate?