AcDec Econ Section 1-2

What concept describes how citizens in the United States can react if they dislike the level of taxation in their local area?

"Voting with their feet" by moving to another city or state

According to the source, why is the marginal cost of providing a true public good close to zero?

Because they are non-rival in consumption

How does the government's ability to earn revenue differ distinctively from that of private businesses?

The government can compel payments through taxation, whereas businesses must sell products to voluntary buyers.

What does the term "pork barrel politics" refer to in the legislative process?

The proclivity of elected officials to introduce projects that steer money to their home communities.

Why is government enforcement of contractual obligations considered essential for a market economy?

It reassures individuals who might otherwise be reluctant to enter agreements for fear the other party will later back out.

Based on the categories of goods discussed in the source, how is a conventional "private good" (such as gasoline, haircuts, or pizza) classified?

High rivalry in consumption and high excludability

According to a 2017 report cited in the text, approximately how much do US sugar price supports and import restrictions cost households in total losses?

$2.4 to $4 billion

Economists believe that vast differences in standards of living around the world are largely due to:

How successfully different societies have organized collective decision-making.

What is "logrolling" in the context of legislative decision-making?

Vote-trading, where legislators support each other's local projects to secure passage.

According to the source, what is the second distinctive power of government that underlies its ability to collect taxes?

A legal monopoly on the legitimate use of force

When a government sets a quota to limit a negative externality, what mechanism can resolve the issue of permits not going to the drivers or firms who value them most highly?

Creating a market in which permits can be bought and sold.

Which federal agency auctioned off the rights to emit sulfur dioxide to the highest bidders to control emissions?

The United States Environmental Protection Agency (EPA)

In the study of collective decision-making, how does the source define "institutions"?

Both formal and informal rules that structure human interaction.

What economic term is used to describe the problem where a jointly owned resource is overused because no one accounts for the negative externalities of their use?

Tragedy of the commons

What does the dimension of "excludability" describe?

The ability to control who consumes a good.

In what year did California create an emissions trading system that sets a cap on greenhouse gas emissions?

2013

In the village fishing example, if residents make decisions independently and have the alternative of a government bond paying 15% interest ($15) on their $100 savings, how many villagers will choose to buy a boat to fish on the shared lake?

3

What type of good has a low degree of rivalry in consumption but a high degree of excludability, such as pay-per-view movies or satellite radio?

Collective goods

In the same village fishing example, if the villagers make a collective decision to maximize total village revenue, how many boats should they purchase?

1

According to the source, why do private negotiations often fail to resolve externalities in real-world situations like oil refinery pollution?

Property rights are poorly defined or nonexistent, and the costs of negotiating among many affected parties are prohibitively high.

Which landmark piece of federal legislation was passed in 1890 to increase market competition and reduce the power of monopolies?

The Sherman Anti-Trust Act

What is the general term for a situation in which competitive markets fail to allocate resources in a socially desirable or efficient manner?

Market failure

What is the primary profit-maximizing strategy for both a monopolist and a firm in a competitive market?

Increase supply until marginal cost equals marginal revenue

What term do economists use to describe a market that is dominated by only a few sellers?

Oligopoly

Compared to a competitive market with equivalent marginal costs, how do the price and quantity of a monopoly's supply compare?

The monopoly supplies a lower quantity at a higher price.

What is the economic term for the practice of charging different prices to different customers based on the individual value they place on a service?

Price discrimination

Runoff from farm fields containing fertilizers polluting downstream drinking water is an example of a _____

Negative Externality

Which economist coined the term "creative destruction" to describe how the innovations of entrepreneurs drive economic change and well-being?

Joseph Schumpeter

In the long run, how much economic profit does a firm in a monopolistically competitive market earn?

Zero economic profits

How does price discrimination affect social welfare in a monopolistic market?

It increases social welfare by moving the market closer to the socially efficient quantity.

Under what condition can trading partners improve their overall well-being through specialization and trade?

As long as they differ in their comparative advantage

What is the economic term for the ability to produce more of a good than others using the same amount of resources?

Absolute advantage

In a perfectly competitive market, what is the relationship between a firm's marginal revenue and the market price?

Marginal revenue is equal to the market price regardless of the quantity supplied.

At what point does a profit-maximizing firm in a competitive market choose its level of production?

Where marginal cost equals marginal revenue

How does opening up to free trade affect consumer and producer surplus in a country that becomes an importer of a good?

Consumer surplus increases, while producer surplus decreases.

In a competitive market, why are business owners content to earn zero economic profits in the long run?

They are earning their opportunity wage, which represents their best alternative activity.

If Bob's Bread Company has daily explicit costs of $950, total revenues of $1,200, and Bob's next-best alternative is earning $200 a day managing another store, what is Bob's daily economic profit?

$50

If Crusoe can produce 36 fish or 36 coconuts in an eight-hour day, what is her opportunity cost of producing one fish?

1 coconut

Why is there often public opposition to international trade agreements even though free trade increases a nation's overall well-being?

The costs and benefits of trade fall on different groups of people, causing some citizens to experience losses.

According to the source, market demand is derived from individual demand curves by adding them:

Horizontally

What happens to the supply of a good if the number of sellers in the market increases?

It shifts to the right

What does the shift of the demand curve to the left represent?

A decrease in demand

If a consumer's income increases and their demand for a specific good also increases, that good is classified as a(n):

Normal good

If the demand for a good decreases when a consumer's income increases, economists refer to that good as:

An inferior good

An improvement in technology would cause the supply curve for a good to shift to the ___

right

A "change in quantity demanded" refers specifically to a movement along the demand curve caused by a change in:

The price of the good itself

The "law of supply" states that as the price of a good rises, the quantity supplied of that good:

Increases

If a shortage exists in the market, what is the natural tendency for the price to do to reach equilibrium?

Rise

what physical change happens to the supply curve after the "Introduction of BGH"?

It shifts to the right

Which determinant of price elasticity of demand suggests that demand is more elastic when consumers can easily switch to other similar products?

Substitutes

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Which determinant of supply elasticity refers to the flexibility of a market for new firms to join or existing firms to leave?

Ease of entry and exit

demand is classified as "Inelastic" when the elasticity is:

Less than 1

What is the provided formula for "Price elasticity of supply"?

(Percentage change in quantity supplied) / (Percentage change in price)

what happens to the quantity demanded in a "Perfectly Elastic" market if the price is even slightly above [price demanded, like 4$]?

Consumers will buy none

Which determinant of supply elasticity explains that supply is less elastic if a key input used in production is difficult to obtain?

Scarce resources

what is the elasticity value for a "Perfectly Inelastic Supply"?

0

what term is used to describe the market inefficiency caused by a tax?

Deadweight loss

regarding "Perfectly Elastic Supply," what quantity will producers supply if the price is below $4?

0