International Trade, Externalities, and Labor Economics Flashcards

Vocabulary flashcards covering core microeconomic concepts including international trade restrictions, market externalities, and labor market dynamics.

Export

A good or service sold to a foreign buyer.

Import

A good or service purchased from a foreign seller.

Tariff

A tax on imported goods that increases producer surplus, decreases consumer surplus, increases revenue to the government, and reduces total surplus.

Import Quota

A trade policy that sets a legal limit on the quantity of a good that other nations can export to a country.

Globalization

The increasing economic, political, and cultural integration among countries.

Externality

A side-effect of an activity that affects bystanders whose interests are not taken into account.

Negative Externality

An uninternalized external cost that causes the market equilibrium quantity to exceed the socially optimal quantity.

Positive Externality

An external benefit enjoyed by bystanders, which can be internalized through public policies such as subsidies.

Coase Theorem

The principle stating that if bargaining is costless and property rights are clearly established and enforced, externality problems can be solved through private bargaining.

Common Resource

A good that is rival in consumption and nonexcludable.

Rational Rule for Society

The rule establishing that society should produce another unit of a good if the marginal social benefit exceeds the marginal social cost.

Socially Optimal Outcome

The outcome that is most efficient for society as a whole, fully including the interests of buyers, sellers, and bystanders.

Labor Supply

The total hours that workers or employees are willing to work at a given wage rate.

Rational Rule for Workers

The principle to work one more hour as long as the wage is at least as large as the marginal benefit of another hour of leisure.

Marginal Product of Labor

The extra output received from hiring an extra worker.

Marginal Revenue Product

The marginal revenue gained from hiring an additional worker.

Value of Marginal Revenue Product of Labor

A measure calculated by multiplying the marginal product of labor by the price of the product.

Efficiency Wages

Above-market wages paid by employers to provide an incentive for workers to keep working hard.