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69 Cards in this Set
- Front
- Back
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Imperfectly competitive
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When individula firms have some control of the price of their output
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Market Power
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the ability to raise price without losing all the quantity demanded
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Pure monopoly
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An industry with a single firm that produces a product for which there are no close substitues an in which the significant barriers to entry prevent other firms from etnering the industry for profits
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Barrier to entry
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Something that prevents new firms from etnering and competing in imperfectly competitve industries
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Government Franchise
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a monoply by viture of government directive (Power or phone company)
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Patent
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a barrier to entry thatgrants exclusive use of the patented product of process to teh inventor
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Collusion
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the act of working with other producers in an effort to limit competition and icnrease joint profits
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Rent-seeking behavior
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Actions taken by households or firms to preserve postiive profits
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Government failure
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occurs when teh government becomers the tool of the rent seeker and teh allocation of resources is made even less efficient by the intervention of government
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Public Choice Theory
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An economic theory that the public officials who set economic policies andr egulate the players act in their own self-interest, just as firms do
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Price Discrimination
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Charging different prices to different buyers
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Perfect price discrimination
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occurs when a firm charges the maximum amount that buyers are willing to pay for each unit
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Trust
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an arrangement in which shareholders of indepent firms agree to give up their stock in exchange for trust certificates that entitle them to a share of the trust's common profits. A group of trustees then operates the trust as a monopoloy, controlling output and setting price.
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Interstate Commerce Commission (ICC)
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A federal regulator group created by Congress in 1887 to oversee and correct abuses int eh railroad industry
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Sherman Act
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Passed by Congress in 1890, it declared every contract to restrain trade among states or nations illegal and declared any attempt at monoploy, sucessful or not a misdemanor. Interpreations of which specific behaivors were legal fell to the courts
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Rule of Reason
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The criterion introduced by the Supreme court in 1911 to determine whether a particular action was legal or illegall within the terms of the Sherman Act
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Clayton Act
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1914, strengthed the Sherman Act and to clarify the rule of reason. It outlawed monoplistic behaviors (contracts, price discrimination and unlimited mergersS)
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Federal Trade Comission (FTC)
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A federal regulator group, 1914, that would investigate the structure and behavior of firms engaging interestate commerce, to determine what constitutes unlawful behavior.
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Per Se Rule
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A rule enunciated by the courts declaringa particular action or outcome to be per se (intrinsic) violation of antitrust law.
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Wheeler-Lea Act
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1938- extgend the language of the FTC act to include deceptive as welll as unfair methods of competition
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Antitrust Division (of the depertment of justic)
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One of two federal agencies empowered to act against violators of the antitrust laws.
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Consent Decrees
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Formal agreements on remedies between all the parties to an antitrust case that must be approved by the court.
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Natural Monopoly
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An industry that realize such large economies of scale in producing its product that single-firm production of that good service is most efficent
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Tax Base
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The measure of value upon which a tax is levied
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Tax rate structure
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the percentage of a tax base that must be paid in taxes
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Proportional Tax
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a tax whose burden is the same proportion on income for all
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Progressive Tax
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a tax whose burden express as a percentage of income, increases as income increases
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Regressive Tax
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a tax whose burden falls as income increases
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Average tax rate
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total amount of tax paid divided by total income
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Marginal Tax Rate
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The tax rate paid on any addiotnal income earned
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Benefits-received principle
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a theory of fairness holding that taxpayers should contribute to government in proportion to the benefits that they recieve from pbulic expenditures
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Ability-to-pay princible
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A theory of taxation holdign that citizens should bear tax burdens in line with their ability to pay taxes
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Estate
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Teh property thats a person owns at the time of his or her death
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Estate Tax
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a tax on thte toal value of a person's estate
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Tax Incidence
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The ultimate distrubution of a tax burden
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sources side/uses side
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The impact of a tax may be felt on one or the other or on both sides of the income to fall or it may cuase prices of godos nad servicces to rise so that income buys less
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tax shifting
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occurs when households can alter their behavior an do something to avoid paying a tax
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Excess burden
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the amount by which the burden of a tax exceedsthe total revnue
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Principle of neutrality
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All else equal, taxes that are neutral with respect to economic decisions are generall pre3ferable to taxes that distort economic decisions. Taxes that are not neutral impose excess burdens
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Principle of second best
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the fact that a tax distorts an econmic descision does not always imply that such at ax imposes an excess burden
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Globalization
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the process of increasing interdependence among contries and their citizens
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Economic globalization
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the process of increasing economic interdepence among countries and their citizens
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Comparative advantage
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A country enjoys a comparative advantage in the production of a good if the production of that good has al ower opportunity cost than it would have if produced in another coutnry
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Genetically modified (GM) foods
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Strains of food tghat have been genetically modified. Examples include insect, and herbicded resistant soybeans ect.
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Immigration Reform and Control Act
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1986- granted amnest to about 3m illion illegal alients and set strong employer rules to slow the flow of immgrants
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Immigration act of 1990
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Increased the number of legal immagants allow intot he US by 150,000
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Public Goods, or social goods
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Goods or services that bestow collective benefits on members of society
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Externality
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A cost or benefit of result forom Some activity or transaction that is imposed or bestowed on some party outside the activity or transaction
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Washington Consensus
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A set of 10 goals prescribed for countries receiving IMF grants and loans
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Vicious-circle-of-poverty hypiothesis
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suggest that poverty is self-perpetuating because poor nations are unable to save and invest enough to accumulate the captial stock that woudl help them grow
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Capital Flight
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The tendency for both human capital and financial capital to leave developing countries in search of higher ratesof return elsewear
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Brain Drain
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The tendency for talented people from developing countries to become educated in a dveloped country andremain there aftergraduation
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Social Overhead Capital
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Basic Infrastructure projects such as roads, power generation and irrigation systems
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Import substitution
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An industrial trade strategy that favors developing local industries that can manufacture goods to replace imports
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Export promotion
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A trade policy that designed to encourage exports
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International Monetary Fund (IMF)
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An international agency whose primary goals are to stabize international exchange rates and to lend money to countries that have problems financing their international transcations
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World bank
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An international agency that lends money to individual coutnries for projects that promote economic development
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Structural Adjustment
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A series of programs in developing nations designed to reduce the size of their public sectors through privatizations and or expenditure reductions, decrease their budget deficits, control inflation and encourage private saving and investment through tax reform
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fertility rate
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The birth rate equal
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mortality rate
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the death rate
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Natural rate of population increase
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The difference between the birth rate and the death rate. DOES NOT Account for immigration
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debt rescheduling
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aan agreementbetween banks and borrowers through which a new scheudule of repyaments of the debt is negotiated; often some of the debt is written off and the repayment period is extended
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Stabilization program
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agreement between a borrowing country and the IMF in which the country agrees to revamp its economic polices to provide incentive for higher export earnings and lower imports
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Socialist Economy
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An economy in which most capital is owned by the government instead of private citizens. AKA Social ownership
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Capitalist ecomy
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an economy in which most capital is privately owned
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Communism
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An economic system in which the people control the means of production (capital and land) directly, without the intervention of a government or state
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Market-socialist economy
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an economy that combines government ownership with market allocation
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Tragedy of Commons
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The idea that collective ownership may not provide the proper private incentives for effciency because individuals do not bear the full costs of their own decisions but do enjoy the full benefits
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Shock Therapy
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The approach to transition from socialism to market capitalism that advocates rapid deregulation ofprices, liberalization of trade, and privatization
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