Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
33 Cards in this Set
- Front
- Back
externadities
|
• Move and Side effects on someone not making that decision to consume or produce
• can be positive or negative |
|
Negative externalities |
• Left alone in the market will produce too much • the social cost is is greater than the private cost and |
|
Market efficient
|
When there is a positive externalities and consumption free market will produce too little |
|
Private good
|
Any good which is excluable and rival • Mall |
|
Common resources |
Any goods which are not excludable and rival
|
|
quasi public |
Any good which is excludable and non rival |
|
Public goods
|
Any good to which is not excludable and non rival |
|
Elastic demand
|
• as price increases revenues decrease and as price decreases revenue increases |
|
Utility
|
• enjoyment and satisfaction from the good or service
• how much are gonna use it And is measured in utils |
|
Law of diminishing marginal utility
|
• as consumption increases satisfaction per additional unit decreases
|
|
Budget constraint |
• limited amount of income to spend on goods and services • need to balance and income utility from different goods |
|
Full demand curve
|
Some of all individual quantities at a given price |
|
Marginal utility
|
• decreases
|
|
Social influence on decision-making
|
• celebrity endorsements •peers Fairness and morals • brand names |
|
Sunk cost
|
• the cost that has already been paid and cannot be recovered
|
|
Course theorem |
Private bargaining will lead to efficient solutions to externalit problems |
|
Price discrimination
|
• charging different prices for the same product • depends on different willingness to pay |
|
Perfect price discrimination
|
Charging the exact willingness to pay for each person which will maximize profit and gets rid of consumer surplus
|
|
Firm
|
Organization that produces goods or services
|
|
Technology
|
Process to turn inputs and two outputs |
|
Total cost
|
The fixed cost plus the variable cost
|
|
Fixed cost
|
Does not vary with outputs regardless of how much we produce |
|
The variable cost
|
varys with outputs and is prone to change
|
|
Explicit
|
Actual spend money
|
|
Implicit
|
Opportunity costs
|
|
Production |
More workers equals more output at a declining rate |
|
Marginal product of labor
|
Additional output from one more worker
|
|
Law of diminishing returns |
Adding more input will causes product of labor to decline · margiinal increases change in total cost from producing one additional unit |
|
economies of scale |
·long run average cost falls as we increase production ·purchase inputs at lower costs ·specialization ·infrastructure ·technology |
|
Government policy to deal with negative externalities |
· Add a tax equal to the externality cost |
|
Government policy to deal with positive externalities |
Give a subsidy equal to the externalites benefits |
|
Rivalry |
If a person has a good the other does not |
|
Excludability |
exclude someone from consuming |