Parcial 1 - Economía II UFM

studied byStudied by 47 people
5.0(4)
Get a hint
Hint

Monopoly

1 / 80

flashcard set

Earn XP

Description and Tags

81 Terms

1

Monopoly

One seller. Organizations operating with the advantage of special privileges granted by the government.

New cards
2

Price taker

a seller that cannot affect the price by his own actions.

New cards
3

Price searcher

a seller that must choose a price.

New cards
4

Competitive markets

markets in which all buyers and sellers are price takers.

New cards
5

Optimal allocation of resources

no unit of the good is being produced whose marginal opportunity cost exceeds its marginal benefit. And every unit of the good whose marginal benefit exceeds its marginal cost is being produced.

New cards
6

Characteristics of perfect competition

  • There is a large number of buyers and sellers so nobody possesses market power.

  • Market participants possess full and complete information of alternatives.

  • Sellers produce a homogenous product.

  • There is costless mobility of resources.

  • Economic actors are price takers.

New cards
7

Mistakes with perfect competition

  • It has overlooked the entrepreneur, which is the driving force of real-world markets.

  • It also ignores the plan-adjustment process that characterizes real-world market activity.

New cards
8

Fair competition

Open entry and exit

New cards
9

Cartel

cooperative arrangement between companies intended to promote a mutual interest. Sellers agreeing not to compete with each other.

New cards
10

Problems of cartels

  • How to prevent competition among its members, who will try to circumvent the agreement

  • How to keep new competitors from trying to enter the market

New cards
11

Predatory price-cutting

reducing prices below cost in order to drive a rival out of business or prevent new rivals from entering with the intention of raising prices afterward to recoup all losses.

New cards
12

Distribution of income

the product of the supply and demand for productive services.

New cards
13

Capital

produced goods that can be used to produce future goods.

New cards
14

Human capital

productive capabilities generated by investment and embodied in human beings, such as knowledge and skills.

New cards
15

Three types of rights

Actual, legal, moral

New cards
16

Unions

Groups of organized workers that claim to compete against corporations, but in reality they want to exclude other workers who would do the same work for less.

New cards
17

Veil of ignorance

Imagine you would have to choose the laws of society, but before choosing, you forgot everything about yourself.

New cards
18

Externalities

costs or benefits that fall on bystanders.

New cards
19

Negative externalities

costs imposed on others that are not taken into account when making a decision.

New cards
20

Externalities are also called

Spillover cost or external cost

New cards
21

Positive externalities

benefits from an action that the decision-maker does not take into account.

New cards
22

Internalizing an externality

when the actor finds out about the consequences of his actions, takes the externality into account and chooses to alter his behavior.

New cards
23

We can reduce externalities through

Negotiation, adjudication, legislation, command and control, taxes, Coase theorem

New cards
24

Negotiation

work it out for ourselves, it produces mutual gains from exchange.

New cards
25

Adjudication

a process for discovering who has which rights. It aims at maintaining the continuity of expectations.

New cards
26

Legislation

The creation of new rules

New cards
27

Command and control

legislation of physical restrictions.

New cards
28

Bubble concept

permit factories to exceed the limits at one point if they could make it up at another point.

New cards
29

Rights to pollute

firms with more emissions can buy these rights, so the total amount of emissions stays the same.

New cards
30

Coase theorem

a solution to externalities through the creation of new markets.

New cards
31

Pigouvian tax

a tax on a good that produces negative externalities, in hopes to reduce it.

New cards
32

Network externalities

The value of a good or service increases the more people use it.

New cards
33

Externalities graph

knowt flashcard image
New cards
34

Structured individualism

el individuo carga con los beneficios y costos de sus acciones.

New cards
35

Private or competitive sector

The market sector

New cards
36

Public sector

Conformado por el gobierno

New cards
37

Coerce

induce cooperation by threatening to violently reduce people's options.

New cards
38

Persuade

induce cooperation by promising to expand people's options.

New cards
39

Free-riders

people who accept benefits without paying their share of the cost of providing those benefits.

New cards
40

Paternalistic argument

the widely held belief that the powerful will take advantage of the weak unless government regulates certain kinds of voluntary exchange.

New cards
41

Prisoners dilemma

knowt flashcard image
New cards
42

What the state is not

We are not the government

New cards
43

What the state is

Provides a legal, orderly, systematic channel for the predation of private property. it is the monopoly of violence.

New cards
44

Economic means of acquiring wealth

Production and exchange

New cards
45

Political means of acquiring wealth

seizure of another's goods or services by the use of force and violence.

New cards
46

Ways to raise government revenue

  • Taxation

  • Public borrowing or debt issue

  • Money creation

New cards
47

Neutral tax

aquel impuesto que no cambia la conducta.

New cards
48

Positive principles of taxation

analyze who bears the burden of taxes and what other economic effects can be expected to result from the imposition of taxes.

New cards
49

Normative principles of taxation

how tax policy can be used to design as desirable a tax system as possible.

New cards
50

Unit tax

a tax charged per unit of a good exchanged.

New cards
51

Ad valorem tax

a tax based on the dollar value of the goods sold.

New cards
52

Retail sales tax

taxes calculated as a percentage of retail sales, a type of ad valorem tax.

New cards
53

Excise tax

taxes placed on particular types of goods, can be either unit or ad valorem.

New cards
54

Tax incidence

the ultimate burden of the tax, after shifting has taken place.

New cards
55

Welfare cost of taxation is also known as

Excess burden or deadweight loss

New cards
56

Welfare cost of taxation

all the exchanges that could be made, but are not made, because of a tax.

New cards
57

Lump sum tax

a tax that completely eliminates the excess burden of taxation.

New cards
58

Ramsey rule

states that to minimize the excess burden of taxation, taxes should be placed on goods in inverse proportion to the elasticity of demand for the goods.

New cards
59

Compliance costs

the costs imposed on taxpayers to comply with the tax laws, such as collecting and keeping records.

New cards
60

Administrative costs

home by the government to collect taxes.

New cards
61

Political cost

home by the taxpayers and the government as a result of taxpayers trying to influence tax laws.

New cards
62

Earmarked tax

taxes whose revenues are designated to a particular spending activity.

New cards
63

General fund financing

the tax revenues are placed in the general fund, from which government programs are financed. The alternative to earmarking.

New cards
64

Benefit principle

states that the people who benefit from the government's expenditures should be the ones who pay for them.

New cards
65

Ability-to-pay principle

states that individuals should pay taxes in proportion to their ability to pay.

New cards
66

Horizontal equity

individuals with an equal ability to pay should pay equal amounts of taxes.

New cards
67

Vertical equity

individuals with a greater ability to pay should pay more taxes.

New cards
68

Proportional tax

a tax that is the same percentage of a taxpayer's income no matter what the level of income.

New cards
69

Progressive tax

a tax that is a larger percentage of the taxpayer's income as income rises.

New cards
70

Regressive tax

a tax that is a smaller percentage of the taxpayer's income as income lowers.

New cards
71

Sumptuary tax

taxes designed to discourage the consumption of the taxed good.

New cards
72

Revenue-neutral carbon tax

el gobierno "devuelve" parte del impuesto sobre la contaminación

New cards
73

Tax graph

knowt flashcard image
New cards
74

Laffer curve

belief that tax cuts generate additional revenue.

<p>belief that tax cuts generate additional revenue.</p>
New cards
75

The old-time fiscal religion

Deficits emerged primarily during periods of war; budgets normally produced surpluses during peacetime, and these surpluses were used to retire the debt created during war emergencies.

New cards
76

Fiscal constitution

rules guiding fiscal choices

New cards
77

Multiplier effect

  • By creating jobs, governments would save money that would have been spent on unemployment benefits.

  • The increase in the number of emplyed people would create additional spending power and therefore boost the economy and tax receipts.

  • Increased tax receipts would pay off the initial debt.

New cards
78

Public choice theory

the application of economic methods to the study of political processes.

New cards
79

Market failure

There are certain areas where market forces do not opperate effectively and therefore we must have government corrective action.

New cards
80

Bifurcated view of human action

We know that people in markets are driven by self-interest, but we must also accept that people in government are driven by the same thing.

New cards
81

Public choice theory’s main question

What policy is likely to emerge from real-world democratic politics, and how does that compare to market alternatives?

New cards

Explore top notes

note Note
studied byStudied by 3 people
Updated ... ago
5.0 Stars(1)
note Note
studied byStudied by 10 people
Updated ... ago
5.0 Stars(1)
note Note
studied byStudied by 13 people
Updated ... ago
5.0 Stars(1)
note Note
studied byStudied by 10 people
Updated ... ago
5.0 Stars(1)
note Note
studied byStudied by 48 people
Updated ... ago
5.0 Stars(4)
note Note
studied byStudied by 3 people
Updated ... ago
4.0 Stars(1)
note Note
studied byStudied by 30 people
Updated ... ago
5.0 Stars(1)
note Note
studied byStudied by 44 people
Updated ... ago
5.0 Stars(1)

Explore top flashcards

flashcards Flashcard85 terms
studied byStudied by 9 people
Updated ... ago
5.0 Stars(1)
flashcards Flashcard61 terms
studied byStudied by 467 people
Updated ... ago
4.4 Stars(9)
flashcards Flashcard20 terms
studied byStudied by 5 people
Updated ... ago
5.0 Stars(1)
flashcards Flashcard86 terms
studied byStudied by 12 people
Updated ... ago
5.0 Stars(1)
flashcards Flashcard60 terms
studied byStudied by 20 people
Updated ... ago
5.0 Stars(1)
flashcards Flashcard85 terms
studied byStudied by 45 people
Updated ... ago
5.0 Stars(1)
flashcards Flashcard69 terms
studied byStudied by 18 people
Updated ... ago
5.0 Stars(1)
flashcards Flashcard32 terms
studied byStudied by 218 people
Updated ... ago
5.0 Stars(2)