MICRO ECON CHAPTERS 7 - 14

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MarkBeaty
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182549
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MICRO ECON CHAPTERS 7 - 14
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2012-11-08 16:36:19
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Review for midterm two in microeconomics
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  1. Welfare economics
    study of how the allocation of resources affects economic well-being
  2. Willingness to pay
    the maximum amount that a buyer will pay for a good
  3. consumer surplus
    the amount a buyer is willing to pay minus the amount they actually pay for it
  4. cost
    the value of everything a seller must give up to produce a good
  5. equality
    the property of distributing economic prosperity uniformly among the members of society >_<
  6. deadweight loss
    the fall in total surplus that results from a market distortion, such as a tax
  7. world price
    the price of a good that prevails in the world market
  8. tariff
    a tax on goods produced abroad and sold domestically
  9. externality
    an uncompensated impact of one persons actions on the well-being of a bystander 
  10. internalizing the externality
    altering incentives so that people take account of the external effects of their actions
  11. corrective tax
    a tax designed to induce private decision makers to take account of the social costs that arise from a negative externality 
  12. coase theorem
    the proposition that if private parties can bargain without cost over the allocation of resources they can solve the problem of externalities on their own 
  13. transaction costs
    the costs that parties incur in the process of agreeing to and following through on a bargain 
  14. excludability
    being able to prevent someone from using a good 
  15. rivalry in consumption 
    one person's use of a good diminishes other peoples use of it
  16. private goods
    goods that are both rival in consumtion and excludable 
  17. public goods
    goods that are neither rival in consumption or excludable 
  18. common resources
    goods that are rival in consumption but not excludable 
  19. club goods
    good that are excludable but not rival in consumption 
  20. free rider
    a person who recieves the benefit of a good but avoids paying for it
  21. cost-benefit analysis
    a study that compares the costs and benefits to society of providing a public good
  22. tradegy of the commons
    parable this shows why common resources are used more than is desirable from the standpoint of society as a whole 
  23. budget deficit
    an excess of government spending over government receipts 
  24. budget surplus
    an excess of government receipts over government spending
  25. average tax rate
    total taxes paid divided by total income 
  26. marginal tax rate
    the extra taxes paid on an additional dollar of income 
  27. benefits principle
    the idea that people should pay taxes based on the benefits they recieve from government services 
  28. ability to pay principle 
    the idea that taxes should be levied on a person according to how well that person can shoulder the burden
  29. vertical equity
    the idea that taxpayers with a greater ability to pay taxes should pay larger amounts 
  30. horizontal equity
    the idea that taxpayers with simlar abilities to pay taxes should pay the same amount 
  31. proportional tax
    a tax for which high income and low income taxpayers pay the same fraction of income
  32. regressive tax
    a tax for which high income taxpayers pay a smaller fraction of their income than do low income taxpayers
  33. progressive tax
    a tax where high income taxpayers pay a larger fraction of their income than do low income taxpayers
  34. total revenue 
    the amount a firm receives for the sale of its output
  35. total cost
    the market value of the inputs a firm uses in production 
  36. profit
    total revenue minus the total cost
  37. explicit costs
    input costs that require an outlay of money by the firm
  38. implicit costs
    input costs that do not require an outlay of money by the firm 
  39. economic profit
    total revenue minus total cost including both explicit and implicit costs
  40. accounting profit
    total revenue minus total explicit costs
  41. production function
    the relationship between quantity of inputs used to make a good and the quantity of output of that good
  42. marginal product
    the increase in output that arises from an additional unit of input
  43. diminishing marginal product
    when the marginal product of an input declines as the quantity of the input increases
  44. fixed costs
    costs that do not vary with the quantity of output produced 
  45. variable costs
    costs that vary with the quantity of output produced 
  46. average total cost
    total cost divided by the quantity of output
  47. average fixed cost 
    fixed cost divided by the quantity of output
  48. average variable cost
    variable cost divided by the quantity of output
  49. marginal cost
    the increase in total cost that arises from an extra unit of production
  50. efficient scale
    the quantity of output that minimizes average total cost
  51. economies of scale
    the property where long-run average total cost falls as the quantity of output increases
  52. diseconomies of scale
    the property where long-run average total cost rises as the quantity of output increases
  53. constant returns to scale
    the property where long-run average total cost stays the same as the quantity of output changes 
  54. competitive market
    a market with many buyers and sellers trading identical products so that each buyer and seller is a price taker 
  55. average revenue
    total revenue divided by the quantity sold
  56. marginal revenue 
    the change in total revenue from an additional unit sold
  57. sunk cost
    a cost that has already been committed and connot be recovered

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