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18 Cards in this Set
- Front
- Back
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Circular Flow
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a diagram that shows the. interactions between firms and households in markets
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Production function
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the relationship between the quantity of a firms inputs and the quantity of its output
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Equilibrium
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Situation in which quantity supplied equals quantity demanded at the market price
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Moral Harzard
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a hidden action market failure in which one market participant has an incentive to take excessive risks or to shrink his/her obligations
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Social Safety net
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term used to describe government programs that help people in economic need
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Commerce Clause
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Part of the US constitution that describes economic powers of congress
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Adverse Selection
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A market failure in which characteristics of buyers or sellers affect markets
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concentration ratio
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measure of the market share controlled by a small number of sellers
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Monopoly
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Market structure in which only one seller serves the entire market
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Price ceiling
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Government action that events prices from exceeding a threshold value
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Progressive Tax
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term used to describe current income tax structure, in which tac rates increase as income levels rise
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dead-weight loss
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reduction of total surplus resukting from taxes, or perhaps from monopoly
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Inelastic Demand
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Charaterisric of demabd in which large in price lead to only a small decreased in quamtity demanded
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Externality
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situation in which a market transaction impacts a third party, either favorably or unfavorablt
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Consumer surplus
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Bemefit recieved by buyers in excess of the price paid for a good or service
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Perfect competitin
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Market structure with many buyers and many sellers, none of which is large enough to impact equilibrium price
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Marginal Cost
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increase in total cost from production of an addictional unit of output
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Budget Deficit
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Situation in which government spends more money than it takes in
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