Exam 2 microeco

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tay
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Exam 2 microeco
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2013-03-28 02:51:32
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exam 2 microeco
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  1. Welfare economics
    the studies how the allocation of resources affects economic well being.
  2. Willingness to Pay
    The maximum amount the buyer is willing to pay for goods. Also, measure how much the buyer value their goods.
  3. cost and willingness to sell.
    the value of everything a seller must give up to produce a good. Meaning opportunity includes the cost of all resources used to produce good, including value of the sellers time.
  4. Producer Surplus
    The amount a seller is paid for a good minus the seller's cost of providing it.
  5. World Price
    the price of a good that prevails in the world market for that good.
  6. Cost
    the value of everything a seller must give up to produce a good
  7. efficiency
    the property of a resource allocation of maximizing the the total surplus received by all members of society.
  8. Deadweight loss
    the fall in total surplus that results from a market distortion, such as a tax.
  9. externality
    the uncompensated impact of one person's 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 for the social cost that arise from a negative externality.
  12. coase theorem
    the proposition that if private parites can bargain without cost over allocation of resouces they can solve the problem of externalities on their own.
  13. free rider
    a person who receives the benefit of a good but avoids paying for it.
  14. cost- benefit analysis
    a study that compares the costs and benefits to society of providing a public good.
  15. tragedy of the commons
    a parable that illustrates why common resources are used more than is desirable from the standpoint of society as a whole.
  16. budget deficit
    an excess of government spending over government receipts.
  17. budget surplus
    an excess of government receipts over government spending.
  18. average tax rate
    total taxes paid divided by total income
  19. benefits principle
    the idea that people should pay taxes based on the benefits they receive from government services.
  20. ability to pay principle
    the idea that taxes should be levied on a person according to how well that person can shoulder the burden.
  21. vertical equity
    the idea that taxpayers with a greater ability to pay taxes should pay larger amounts.
  22. horizontal equity
    the idea that taxpayers with similar abilities to pay taxes should pay the same amount.
  23. total cost
    the market value of the inputs a firm uses in production
  24. economic profit
    total revenue minus total cost, including both explicit and implicit costs.
  25. accounting profit
    total revenue minus total explicit cost.

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