Econ Pt 1 (Test 2)

Front 1

Marginal private benefit curve

Back 1

a curve which represents the value that consumers place on marginal units of the good or service; the demand curve.

Front 2

Consumers’ surplus

Back 2

the difference between what consumers are willing to pay for a given quantity of a good or service (total consumer valuation) and what they have to pay (total expenditure).

Front 3

Marginal private cost curve

Back 3

a curve showing the marginal cost to society of producing additional units of a good or service; the supply curve

Front 4

Producers’ surplus

Back 4

the difference between the total revenue to producers from selling a given quantity of a good or service and the total cost to them of using the scarce resources in that production

Front 5

Economic efficiency

Back 5

the allocation of resources that allows maximum benefit to be achieved at minimum cost.

Front 6

Economic system

Back 6

the part of the social system determining what, how, and for whom goods and services are produced (also called the three basic economic questions).

Front 7

Pure capitalism

Back 7

an economic system in which most resources are owned and relevant decisions are made by private individuals

Front 8

Pure communism

Back 8

an economic system in which most productive resources are publicly owned (state ownership).

Front 9

Socialism

Back 9

an economic system in which most nonhuman productive resources are state-owned.

Front 10

The Three Economic Functions of Government

Back 10

1 To ensure and enforce private property rights
2 To provide public goods
3 To control and correct externalities through law and regulation

Front 11

Public good

Back 11

a good such that, once produced, one individual’s consumption of the good does not reduce or exclude the ability of other individuals to consume the good.

Front 12

Free rider

Back 12

an individual who receives the benefit of consuming a public good or service without paying for it.

Front 13

Externalities

Back 13

benefits or costs of an individual’s activity that the individual does not receive or bear; benefits or costs borne by a third party.

Front 14

Externalities pos and neg

Back 14

positive (health care and education) or negative (pollution and drunken driving).

Front 15

Antitrust policies

Back 15

regulations established by laws and government agencies that attempt to preserve business competition.