Principles of Economics Final Exam Review

These flashcards cover key concepts from a Principles of Economics course focusing on externalities, market structures, and economic policies.

Externalities

Costs or benefits that affect a third party who did not choose to incur that cost or benefit.

Monopolistic Competition

A market structure where many firms offer products that are similar but not perfect substitutes.

Nash Equilibrium

A solution to a game where no player can benefit by changing their strategy unilaterally.

Private Market

A market where transactions are conducted without government intervention.

Consumer Surplus

The difference between what consumers are willing to pay and what they actually pay.

Producer Surplus

The difference between what producers are willing to accept for a good versus what they actually receive.

Deadweight Loss

A loss of economic efficiency that occurs when the equilibrium outcome is not achievable.

Price Ceiling

A maximum price set by the government that can be charged for a product.

Price Floor

A minimum price set by the government for a product, above which it cannot fall.

Subsidy

A financial assistance granted by the government to encourage the production or consumption of a good.

Inelastic Demand

A situation where the quantity demanded is not greatly affected by price changes.

Market Structure

The organizational characteristics of a market, influencing the behavior of firms in that market.

Elastic Demand

A scenario where the quantity demanded is significantly affected by price changes.

Free Rider Problem

A situation where individuals can benefit from resources, goods, or services without payment.

Price Discrimination

The practice of charging different prices to different consumers for the same good.