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24 Cards in this Set
- Front
- Back
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Economic Profit
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is the difference between total revenue and total cost.
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Net Benefit
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the total benefit of an activity minus its opportunity cost.
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Marginal Benifit
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the amount by which an additional unit of an activity increases its total benefit.
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Marginal Cost
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the amount by which an additional unit of an activity increases its total cost.
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Marginal Decision Rule
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states that if the marginal benefit of an additional unit of an activity exceeds the marginal cost, the quantity of the activity should be increased. If the marginal benefit is less than the marginal cost, the quantity should be reduced.
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Constraint
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boundary that limits the range of choices that can be made.
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Deadweight Loss
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the loss in net benefits resulting from a failure to carry out an activity at the most efficient level
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Efficient
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refers to the allocation of resources when the net benefits of all economic activities are maximized.
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Property Rights
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set of rules that specify the ways in which an owner can use a resource.
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Exclusive Property Rights
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property right that allows its owner to prevent others from using the resource.
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Transferable Property Right
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property right that allows the owner of a resource to sell or lease it to someone else.
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Consumer Surplus
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amount by which the total benefits to consumers from consuming a good exceed their total expenditures on the good.
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Producer Surplus
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the difference between the total revenue received by sellers and their total cost.
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Market Failure
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failure of private decisions in the marketplace to achieve an efficient allocation of scarce resources.
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Public Good
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good for which the cost of exclusion is prohibitive and for which the marginal cost of another user is positive.
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Private Good
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a good for which exclusion is possible and for which the marginal cost of another user is positive.
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Free Riders
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people or firms that consume a public good without paying for it.
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External Cost
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cost imposed on others outside of any market exchange.
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External Benefit
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action taken by a person or firm that creates benefits for others in the absence of any market agreement.
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Common Property Resource
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resources for which no property rights have been defined
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Rival
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–One person’s consumption of the
good denies anyone else from consuming that item (over a fixed time period) |
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Non-Rival
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Goods that can be consumed
simultaneously by more than one person without hindering the ability of each to consume |
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Excludable
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goods which have
barriers to be overcome or criteria that must be met in order for someone to have access to obtain the good |
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Non-Excludable
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goods that everyone has access to and there are no criteria to be met for one to consume
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