Econ 2113- Vocab Questions Exam

Front 1

Price taker

Back 1

firm that has no influence over market price and thus takes the price as given

Front 2

free entry (exit)

Back 2

when there are no special cost that make it difficult for a firm to enter or exit an industry

Front 3

Profit

Back 3

difference between total revenue and total cost

Front 4

marginal revenue

Back 4

changes in revenue resulting from a one unit increase in output

Front 5

Producer surplus

Back 5

sum over all units produced by a firm of differences between the market price of a good and the marginal ost of production

Front 6

Zero economic profit

Back 6

a firm is earning a normal return on its investment it is doing as well as it could by investing its money elsewhere

Front 7

Long run competitive equilibrium

Back 7

all firms in an industry are maximizing profit no firm has an incentive to enter or exit and price is such that quantity supplied equals quantity demanded

Front 8

economic rent

Back 8

amount that firms are willing to pay for an input less the minimum amount necessary to obtain it.

Front 9

constant cost industry

Back 9

industry whose long run supply curveis is horizontal

Front 10

increasing cost industry

Back 10

industry whose long run supply curve is upward sloping

Front 11

decreasing cost industry

Back 11

industry whose long run supply curve is downward sloping

Front 12

Welfare effect

Back 12

gains and losses to consumer and producers

Front 13

deadweight loss

Back 13

Net loss of total( consumer plus supplier) surplus

Front 14

economic efficiency

Back 14

maximization of aggregate consumer and producer surplus

Front 15

market failure

Back 15

situation in which an unregulated competitive market is inefficient because prices fail to provide proper signals to consumers and producers

Front 16

externality

Back 16

action taken by either a producer or a consumer which affects other producer or consumer but is not accounted for the market price

Front 17

Specific tax

Back 17

tax of a certain amount of money per unit sold

Front 18

subsidy

Back 18

payment reducing the buyers price below the sellers price a negative tax

Front 19

monopoly

Back 19

market with only one seller

Front 20

monopsony

Back 20

market with only one buyer

Front 21

market power

Back 21

ability of a seller or buyer to affect the price of a good

Front 22

marginal revenue

Back 22

change in revenue resulting from a one unit increase in output

Front 23

rent seeking

Back 23

spending money in socially unproductive efforts to acquire maintain or exercise monopoly

Front 24

natural monopoly

Back 24

firms that can produce the entire output of the market at a cost lower then what it would e if there were several firms

Front 25

rate of return regulation

Back 25

the maximum price allowed by regulatory agency is based on the rate of return that a firm will earn

Front 26

oligopsony

Back 26

market with only a few buyers

Front 27

monopsony power

Back 27

buyers ability to affect the price fo a good

Front 28

marginal value

Back 28

additional benefit derived from purchasing one more unit of a good

Front 29

marginal expenditure

Back 29

additional cost of buying one more unit of a good

Front 30

average expenditure

Back 30

price paid per uint of a good

Front 31

price discrimination

Back 31

practice of charging different prices to different consumers for similar goods

Front 32

reservation price

Back 32

maximum price that a customer is willing to pay for a good

Front 33

first degree price discrimination

Back 33

practice of charging each customer her reservation price

Front 34

variable profit

Back 34

sum of profits on each incremental unit produced by a firm profit ignoring fixed cost

Front 35

second degree price discrimination

Back 35

practice of charging different prices per unit for different quantities of the same good or service

Front 36

black pricing

Back 36

practice fo charging different prices for different quantities or blocks of a good

Front 37

Third degree price discrimination

Back 37

practice of dividing consumer into two or more groups with separate demand curves and charging different prices to each group

Front 38

externality

Back 38

action taken by either a producer or a consumer which affects other producers or consumers but is not accounted for in the market price

Front 39

marginal external cost

Back 39

incase in cost imposed externally as one or more firms increases output by one unit

Front 40

marginal social cost

Back 40

sum of the marginal cost of production and the marginal external cost

Front 41

marginal external benefit

Back 41

increased benefit that accrues to other parties as a firm increases output by one unit

Front 42

marginal social benefit

Back 42

sum of the marginal private benefit plus the marginal external benefit

Front 43

emission standard

Back 43

legal limit on the amount of pollutants that a firm can emit

Front 44

emission fee

Back 44

charge levied on each unit of firms emissions

Front 45

transferable emissions permits

Back 45

system of marketable permits allocated among firms specifying the maximum level of emissions that can be generated

Front 46

property rights

Back 46

legal rules stating what people or firms may do with their property

Front 47

coase theorem

Back 47

principle that when parties can bargain without cost and to their mutual advantage the resulting outcome will b efficient regardless of how property rights are specified

Front 48

common property resource

Back 48

resource to which anyone has fee access

Front 49

public good

Back 49

nonexclusive and non-rival good, the marginal cost of provision to an additional consumer is zero and people cannot be excluded rom consuming it.

Front 50

non-rival good

Back 50

good for which the marginal cost of its provision to an additional costumer is zero

Front 51

nonexclusive goods

Back 51

goods that people cannot be excluded from consuming so that its is difficult or impossible to change for their use

Front 52

free rider

Back 52

consumer or producer who dose not pay for a nonexclusive good in the expectation that others will .