Economics Lecture Notes

0.0(0)
studied byStudied by 0 people
learnLearn
examPractice Test
spaced repetitionSpaced Repetition
heart puzzleMatch
flashcardsFlashcards
Card Sorting

1/16

flashcard set

Earn XP

Description and Tags

Vocabulary flashcards based on economics lecture notes covering efficiency, incentives, and production possibilities.

Study Analytics
Name
Mastery
Learn
Test
Matching
Spaced

No study sessions yet.

17 Terms

1
New cards

Economic Efficiency

The situation where both allocative and productive efficiency are achieved.

2
New cards

Allocative Efficiency

Situation where production matches consumer preferences (supply-demand curve).

3
New cards

Productive Efficiency

Situation where all resources are utilized in the economy to produce as much as possible (PPF/PPC Curve).

4
New cards

Dynamic Efficiency

Efficiency achieved through Research & Development.

5
New cards

Allocative Efficiency Condition

Occurs when S=MC and D=MU, where S is supply, MC is marginal cost, D is demand, and MU is marginal utility.

6
New cards

Incentive (Economics)

A factor (like subsidies) that motivates a business to increase production.

7
New cards

Government Subsidies

Can incentivize a business, increasing the amount of money for materials and capital, leading to increased production.

8
New cards

Impact of Subsidies

Lower unit costs potentially lead to a fall in the price of goods and encourage a rise in demand.

9
New cards

Allocative Efficiency (Price)

Achieved when price is equal to the marginal cost of production (MC).

10
New cards

Allocative Efficiency (Marginal)

Marginal utility of a good equals the marginal cost of that good.

11
New cards

Externalities

The demand curve assumes no externalities (impact on third parties), e.g., pollution.

12
New cards

Over Consumption

Occurs when the price people are willing to pay is much greater than the marginal benefit.

13
New cards

Productive Efficiency

Producing goods and services with the optimal combination of inputs to produce maximum output for the minimum cost.

14
New cards

Productive Efficiency (PPC)

To be productively efficient, the economy must be producing on its PPC (Production Possibility Curve).

15
New cards

Productive Efficiency (Trade Off)

At the PPC, it is impossible to produce more of one good without producing less of another.

16
New cards

Productive Efficiency & Short Run Average Cost

A firm is productively efficient when producing at the lowest point of the short-run cost curve where MC = Average Cost.

17
New cards

Economies of Scale

With productive efficiency, the firm is benefiting from all available economies of scale (as output increases, average cost falls).