ECON 2000 Practice Final Exam Flashcards

Flashcards from ECON 2000 Practice Final Exam

Herd immunity

A population having enough vaccinated individuals that an infection won’t be transmitted if a single person gets sick; vaccinating one person can have a beneficial effect on the health of others.

Luxury good

If income doubles, consumption of the good will more than double.

Minimum Efficient Scale

The quantity of output that minimizes a firm’s long-run average total cost.

Monopoly

Having a large minimum efficient scale relative to the size of the market, A government mandate, such as a patent and Sole ownership of a crucial input.

Externalities

Too much of a good will be provided when social cost exceeds private cost and too little of a good will be provided when social benefit exceeds private benefit.

Point of consumption

An additional unit would, in fact, lower her overall utility.

Firm’s profits maximized when the marginal cost of its output is equal to the price of the output (that is, when 𝑃𝑃 = 𝑀𝑀𝑀𝑀)

This is the point at which profit is neither growing nor shrinking.

Monopolies sell less and charge more than the supply side of a perfectly-competitive market.

The monopoly’s opportunity cost includes lost revenue from price drops.

PPF "bowed" outward

Increasing returns-to-scale.

Rational behavior

Deciding whether to take an action by weighting the costs against the benefits, and then taking the action only if the costs do not outweigh the benefits.