Term
| Economy has three coordination problems |
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Definition
| 1) what to produce 2) how to produce it 3) for whom to produce it |
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Term
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Definition
| policies that affect some and hurt none (not possible) |
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Term
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Definition
| structural (mismatch), cyclical (low demand), seasonal (e.g. harvest), frictional (between jobs) |
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Term
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Definition
| accepted, stable, divisible, portable |
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Term
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Definition
| natural, governmental, technological, geographical |
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Term
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Definition
| 1) production design 2) process design 3) plant design 4) job design 5) management design |
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Term
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Definition
| all other factors that affect demand are held constant |
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Term
| Subdivisions to economics |
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Definition
| 1) Positive economics (what is) 2) normative economics (what should be) and 3) the art of economics (relation of 1 & 2) |
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Term
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Definition
| If the marginal benefits outweigh the marginal costs, DO IT! |
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Term
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Definition
| relationships between points is same as in at the points |
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Term
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Definition
| a system where the government doles out the rights of production |
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Term
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Definition
| horizontal sum of all individual demand curves |
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Term
| equation for price elasticity of demand |
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Definition
| E(D) = % change in # demanded / % change in P |
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Term
| distinction between necessary, normal and luxury goods in terms of elasticity |
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Definition
| E(Nc) < 1, E(Nm) = 1, E(L) > 1 |
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Term
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Definition
| goods used in conjuncture with other goods with a negative cross-price elasticity |
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Term
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Definition
| loss of producer and consumer surplus from a tax (e.g. welfare loss triangle) |
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Term
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Definition
| taxes are levied against those who use a service |
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Term
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Definition
| taxes are levied against those with the resources most able to pay |
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Term
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Definition
| tax levied on luxury goods |
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Term
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Definition
| activities that transfer surpluses from one group to another (e.g. lobbying) |
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Term
| principle of rational choice |
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Definition
| consumers spend money on the goods that will give them the most marginal utility |
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Term
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Definition
| costs are reduced for products produced interdependently |
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Term
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Definition
| a curve that represents varying combos of factors that result in equal amounts of output |
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Term
| factors to a perfectly competitive market |
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Definition
| 1) both buys & sellers are price takers 2) high # of firms 3) no barriers of entry 4) firms' products are identical 5) complete info 6) selling firms are profit-maximizing and entrepreneurial |
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Term
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Definition
| ability of firms to act in concert to maximize gains for all (e.g. standard electrical plugs) |
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Term
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Definition
| the physical characteristics of the market within which firms interact |
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Term
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Definition
| North American Industry Classification System |
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Term
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Definition
| percent of sales by top firms compared to total firms |
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Term
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Definition
| market concentration index measured by adding the squared value of the individual market shares |
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Term
| strategic decision making |
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Definition
| taking explicit account of a rival's expected response |
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Term
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Definition
| firms operating below their possible optimal level |
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Term
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Definition
| when greater use of a product increases its marginal benefit |
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Term
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Definition
| when prior use of tech makes advances more difficult (e.g. QWERTY) |
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Term
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Definition
| only one buyer of labor services exists |
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Term
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Definition
| family income equality representation |
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Term
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Definition
| charges levied by the govt for creating pollution |
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Term
| adverse selection problem |
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Definition
| when buyers and sellers have different amounts of information |
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Term
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Definition
| doing poorly means you are doing well (e.g. ag industry) |
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Term
| types of failures of market outcome |
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Definition
| 1) distributional issues (e.g. skewed surpluses) 2) irrationality (e.g. alcoholic) and 3) violations of inalienable rights (e.g. slavery) |
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