4. Gains from Trade, 5. Externalities and Public Goods, 6. Factors of Production, 7. Monopoly

studied byStudied by 2 people
0.0(0)
learn
LearnA personalized and smart learning plan
exam
Practice TestTake a test on your terms and definitions
spaced repetition
Spaced RepetitionScientifically backed study method
heart puzzle
Matching GameHow quick can you match all your cards?
flashcards
FlashcardsStudy terms and definitions

1 / 34

encourage image

There's no tags or description

Looks like no one added any tags here yet for you.

35 Terms

1

Production Possibilities Curve (PPC)

[Or “Frontier” in other textbooks] - is a graphical representation of the production schedule. Shows the relationship between maximum production of one good for a given level of production of another good

New cards
2

Opportunity Cost

what you give up to produce one additional good

New cards
3

Comparative Advantage

is the ability of an individual, firm, or country to produce a certain good at a lower opportunity cost than other other producers

New cards
4

Absolute Advantage

is the ability of an individual firm or country to produce more of a certain good than other competing producers given the same amount of resources

New cards
5

Export

any good that is produced domestically but sold abroad

New cards
6

Import

is any good that is produced abroad but sold domestically

New cards
7

Tariff

are taxes levied on goods and services transported across political boundaries

New cards
8

Externality

A benefit or cost that affects someone who is not directly involved in the production or consumption of a good or service

New cards
9

(Marginal) Private Benefit (MPB)

The benefit received by the consumer of a good or service

New cards
10

(Marginal) Private Cost (MPC)

The cost born by the producer of a good or service

New cards
11

(Marginal) Social Benefit (MSB)

The total benefit from consuming a good or service, including both the private benefit and any external benefit

New cards
12

(Marginal) Social Cost (MSC)

The total cost of producing a good or service, including both the private cost and any external cost

New cards
13

Excludable

The situation in which anyone who does not pay for a good cannot consume it

New cards
14

Non-Excludable

means that it is impossible to exclude others from consuming the good, whether they have paid it or not

New cards
15

Rival

The situation that occurs when one person’s consuming a unit of a good means no one else can consume it

New cards
16

Non-Rival

means that a one person’s consumption does not interfere with another person’s consumption

New cards
17

Private Good

A good that is both rival and excludable

New cards
18

Public Good

A good that is both non-rival and non excludable

New cards
19

Common Resource

(or “Common-Pool Resource Good”) - A good that is rival but not excludable

New cards
20

Club Good

(or Quasi-Public Good; and this corresponds to a “Natural Monopoly” market structure) - a type of good that is excludable (meaning you can prevent people from using it) but non-rivalrous (meaning one person's use doesn't diminish the availability for others)

New cards
21

Tragedy of the Commons

The tendency for a common resource to be overused

New cards
22

Free Rider / Free-Rider Problem

Benefiting from a good without paying for it

New cards
23

Coase Theorem

The argument that if transactions costs are low, private bargaining will result in an efficient solution to the problem of externalities

New cards
24

Marginal product (MP)

the additional output produced by adding one more unit of a specific input (like labor), while keeping all other inputs constant

New cards
25

Marginal product of labor (MPL)

is the increase in a firm’s revenues created by hiring an additional laborer

New cards
26

Value of the marginal product of labor (VMPL)

[The extra V is to be unambiguous whenever the output is in dollars, with the extra L is to be unambiguous whenever the input is labor.] - What MPL is called whenever it is explicitly in dollars. MPL can thus refer to marginal product of actual stuff, like cups of coffee

New cards
27

Human capital

is tools of the mind, the stuff in people’s heads that makes them productive

New cards
28

Compensating wage differential

(or just “compensating differential”) - A compensating differential is a difference in wages that offsets differences in working conditions

New cards
29

Residual Demand Curve

Demand curve of an individual perfectly competitive producer ( Straight horizontal line)

New cards
30

Price Discrimination

many monopolists find that they can increase their profits by selling the same goods to different customers for different prices : they practice price discrimination. Sellers engage in this when they charge different prices to different consumers for the same good.

New cards
31

Perfect Price Discrimination

(also known as “first-degree price discrimination”) - takes place when a monopolist charges each consumer his or her willingness to pay, the maximum the consumer is willing to pay. Also called “first degree price discrimination”

New cards
32

Quantity Effect

One more unit is sold, increasing total revenue by the price at which the unit is sold

New cards
33

Price Effect

In order to sell that last unit, the monopolist must cut the market price on all units sold. This decreases total revenue

New cards
34

Natural Monopoly

a market where one company can provide a product or service more cheaply than multiple companies

New cards
35

Monopolistic Competition

a market structure where many companies sell similar but not identical products. It's a type of imperfect competition that combines aspects of monopolies and perfect competition

New cards

Explore top notes

note Note
studied byStudied by 64 people
213 days ago
4.7(3)
note Note
studied byStudied by 26 people
891 days ago
5.0(1)
note Note
studied byStudied by 25 people
514 days ago
5.0(1)
note Note
studied byStudied by 4 people
688 days ago
5.0(1)
note Note
studied byStudied by 16 people
903 days ago
5.0(1)
note Note
studied byStudied by 10 people
760 days ago
5.0(1)
note Note
studied byStudied by 67 people
701 days ago
5.0(4)
note Note
studied byStudied by 44 people
758 days ago
5.0(3)

Explore top flashcards

flashcards Flashcard (92)
studied byStudied by 11 people
841 days ago
4.0(1)
flashcards Flashcard (116)
studied byStudied by 10 people
800 days ago
5.0(1)
flashcards Flashcard (43)
studied byStudied by 15 people
3 days ago
5.0(1)
flashcards Flashcard (57)
studied byStudied by 17 people
750 days ago
5.0(2)
flashcards Flashcard (40)
studied byStudied by 2 people
177 days ago
5.0(1)
flashcards Flashcard (71)
studied byStudied by 42 people
385 days ago
5.0(4)
flashcards Flashcard (82)
studied byStudied by 41 people
88 days ago
5.0(1)
flashcards Flashcard (222)
studied byStudied by 29 people
646 days ago
5.0(1)
robot