Economics 101 Final Exam

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Monopoly

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the exclusive control of a good in trade

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Long run equilibrium

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when marginal revenue equals marginal costs, which is also equal to average total costs

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competetive industry

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Large number of firms, low barriers for entry (High comp.)

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marginal revenue

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amount gained by producing one additional unit of a good

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marginal costs

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cost of producing one additional unit of a good or service

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economic profit

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The difference between the revenue received from the sale of an output and the opportunity cost of the inputs used. In calculating economic profit, opportunity costs are deducted from revenues earned.

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accounting profit

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The monetary costs a firm pays out and the revenue a firm receives. It is the bookkeeping profit, and it is higher than economic profit. Accounting profit = total monetary revenue- total costs. Economic profit is the monetary costs and opportunity costs a firm pays and the revenue a firm receives.

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oligopoly

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State of limited competition, high entry barriers, only a few firms

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inelastic demand/ supply

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Customers are more likely to buy regardless of price

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elastic demand/ supply

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Customers are less likely to buy with raises in price, more likely with drops

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tax

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amount paid per unit of a good to the government

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equilibrium quantity

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Equilibrium quantity is simultaneously equal to both thequantity demanded and quantity supplied. In a market graph, the equilibrium quantity is found at the intersection of the demand curve and the supply curve

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equilibrium price

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The market price where the quantity of goods supplied is equal to the quantity of goods demanded. This is the point at which the demand and supply curves in the market intersect.

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wages vs. expenditure

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absolute advantage

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ability for a firm to produce more efficiently than another group

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comparative advantage

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ability for a firm to produce a good more efficiently than another good

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marginal tax rate

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The percentage of tax applied to your income for each tax bracket in which you qualify. In essence, the marginal tax rate is the percentage taken from your next dollar of taxable income above a pre-defined income threshold.

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proportional tax system

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Tax imposed so that the tax rate is fixed, with no change as the taxable base amount increases or decreases. The amount of the tax is in proportion to the amount subject to taxation.... As a result, such a flat marginal rate is consistent with a progressive average tax rate.

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lump sum tax system

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A lump-sum tax is a tax that is a fixed amount, no matter the change in circumstance of the taxed entity. (A lump-sum subsidy or lump-sum redistribution is defined similarly.) Stays the same!

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dead weight loss

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Economic loss when a system is not at equilibrium

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price ceiling

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Government imposed price that can be charged for a product. (highest that can be charged) (below equilibrium)

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price floor

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Government imposed price that can be charged for a product. (lowest that can be charged) (above equilibrium)

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marginal cost

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the cost added by producing one additional unit of a product or service.

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average total cost

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equal to total cost divided by the number of goods produced (the output quantity, Q). It is also equal to the sum of average variablecosts (total variable costs divided by Q) plus average fixedcosts (total fixed costs divided by Q).

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average fixed cost

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fixed costs of production (FC) divided by the quantity (Q) of output produced. Fixed costs are those costs that must be incurred in fixed quantity regardless of the level of output produced.

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opportunity cost

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the loss of potential gain from other alternatives when one alternative is chosen.

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short run vs long run

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The main difference between long run and short runcosts is that there are no fixed factors in the long run; there are both fixed and variable factors in the short run . In the long run the general price level, contractual wages, and expectations adjust fully to the state of the economy.

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profit maximizing firm

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https://www.slideshare.net/JassenPapa/the-profit-maximizing-firm

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Q*

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Exists when a market is in equilibrium.Equilibrium quantity is simultaneously equal to both the quantity demanded and quantity supplied. In a market graph, the equilibrium quantity is found at the intersection of the demand curve and the supply curve.

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normal vs inferior good

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An inferior good is a good whose quantity demanded decreases when consumer income rises (or quantity demanded rises when consumer income decreases), unlike normal goods, for which the opposite is observed. Normal goods are those for which consumers' demand increases when their income increases.

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income effect

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The change in consumption resulting from a change in realincome. This income change can come from one of two sources: from external sources, or from income being freed up (or soaked up) by a decrease (or increase) in the price of a good that money is being spent on.

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substitution effect

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One component of the effect of a change in the price of a good upon the amount of that good demanded by a consumer, the other being the income effect.

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laffer curve

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Theory developed by supply-side economist Arthur Laffer to show the relationship between tax rates and the amount of tax revenue collected by governments. The curve is used to illustrate Laffer's main premise that the more an activity such as production is taxed, the less of it is generated.

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labor tax

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The cost of labor is the sum of all wages paid to employees, as well as the cost of employee benefits and payroll taxes paid by an employer. The cost of labor is broken into direct and indirect (overhead) costs.

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capital income tax

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A capital gains tax (CGT) is a tax on capital gains, the profit realized on the sale of a non-inventory asset that was purchased at a cost amount that was lower than the amount realized on the sale. The most commoncapital gains are realized from the sale of stocks, bonds, precious metals and property.

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closed economy/world economy

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https://www.quora.com/What-is-the-difference-between-open-economy-and-closed-economy

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elasticity

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Measure of a variable's sensitivity to a change in another variable. In business and economics, elasticity refers the degree to which individuals, consumers or producers change their demand or the amount supplied in response to price or income changes.

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marginal product of labor/land

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https://www.boundless.com/economics/textbooks/boundless-economics-textbook/inputs-to-production-labor-natural-resources-and-technology-14/demand-for-labor-78/marginal-product-of-labor-revenue-298-12395/

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marginal rate of substitution

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The rate at which a consumer is ready to give up one good in exchange for another good while maintaining the same level of utility. At equilibrium consumption levels (assuming no externalities), marginal rates of substitution are identical.

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perfect competetor

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http://www.investopedia.com/terms/p/perfectcompetition.asp

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single price monopolist

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A firm that must sell each unit of its output for the same price to all its customers. A Single-Price Monopoly's Output and Price Decision.Price and Marginal Revenue. A monopoly is a pricesetter, not a price taker like a firm in perfect competition.

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monopolistic competetor

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Monopolistic competition is a type of imperfectcompetition such that many producers sell products that are differentiated from one another (e.g. by branding or quality) and hence are not perfect substitutes.

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price= to ATC

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https://www.economics.utoronto.ca/jfloyd/modules/tfcm.html

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tariff

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a tax or duty to be paid on a particular class of imports or exports.

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social/domestic surplus

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extra muns

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quota

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government-imposed trade restriction that limits the number, or monetary value, of goods that can be imported or exported during a particular time period. Quotas are used in international trade to help regulate the volume of trade between countries.

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prod. possibilities frontier

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Shows the maximum possible output combinations of two goods or services an economy can achieve when all resources are fully and efficiently employed. Opportunity Cost and the PPF. Reallocating scarce resources from one product to another involves an opportunity cost.

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income inequality

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the extent to which income is distributed in an uneven manner among a population. In the United States, income inequality, or the gap between the rich and everyone else, has been growing markedly, by every major statistical measure, for some 30 years.

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subsidies

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a sum of money granted by the government or a public body to assist an industry or business so that the price of a commodity or service may remain low or competitive."a farm subsidy"