Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
18 Cards in this Set
- Front
- Back
|
Competitive market economy
|
all the markets within an economy are at equilibrium
|
|
|
General equilibrium
|
quantity supplied is equal to quantity demanded in all markets
|
|
|
Efficient in consumption
|
there is no way for an economy to redistribute goods that would not make others worse off.
|
|
|
Economic signals
|
any piece of information that helps people make better economic decisions
|
|
|
Efficient in production
|
no way for firm to produce more of one good without producing less of another good.
|
|
|
Efficient allocation of resources
|
if there is no way to reallocate factors of production among producers to produce more of the same goods without producing less of others.
|
|
|
Efficient in output levels
|
if there isn't a different mix of output that would make the firm better off (PPF)
|
|
|
Utility possibility frontier
|
shows how well off one individual or group could be for each given total utility level of another individual/ group
|
|
|
Market failure
|
when a market falls out of equilibrium
|
|
|
Externalities
|
external costs/ benefits
|
|
|
Marginal social cost of a good or activity
|
is equal to the marginal cost of production + its marginal external cost
|
|
|
Pigouvian taxes
|
taxes designed to reduce external costs, by disincentivising the naughty
|
|
|
Pigouvian subsidy
|
providing incentives for positive externalities
|
|
|
Coase theorem
|
that even in the presence of externalities, equalibirium can be reached so long as the different parties involved are able to talk to eachother and transaction costs are low.
|
|
|
Internalize the externalities
|
when individuals take externalities into account regarding their decisions
|
|
|
Technology spillover
|
external benefit that results when knowledge spreads among individuals
|
|
|
Marginal social benefits of a good or activity
|
equal to marginal benefit that accrues to consumers plis its marginal external benefit
|
|
|
Free rider problem
|
individuals have no incentive to pay for their own consumption and thus freeride
|
