Micro Chapter 3

Front 1

Utility

Back 1

satisfaction received from consumption; sense of well being

Front 2

Transfer payments

Back 2

grants given to individuals from the government

Front 3

Firms

Back 3

Economic units formed by profit seeking entrepreneurs who employ resources to produce goods and services for sale

Front 4

3 types of firms

Back 4

1) Sole proprietorship- single owner, all profit yet all liability too. (most common)
2) Partnership- multiple owners who share profit but are liable if one messes up. (least common)
3) Corporation- legal entity owned by stockholders whos liability is limited to value of stock ownership.

Front 5

Cooperative

Back 5

people who pool their resources to buy and sell more efficiently than they could individually

Front 6

not for profit organization

Back 6

have a social purpose they don't pursue any profit.

Front 7

market failure

Back 7

a condition that arises when the unregulated operation of markets yields socially undesirable results.

Front 8

Natural monopoly

Back 8

a firm that can supply the entire market at a lower per unit cost than could two or more firms.

Front 9

private good

Back 9

rival in consumption and is exclusive

Front 10

public good

Back 10

available for all to consume regardless if one pays or not

Front 11

externality

Back 11

a cost that affects neither buyer nor seller but the government

Front 12

fiscal policy

Back 12

the use of government collection to influence economy wide variables such as inflation and economic growth

Front 13

monetary policy

Back 13

regulation of the money supply to influence wide variables.

Front 14

ability to pay tax principle

Back 14

more income you pay more

Front 15

benefits received tax principle

Back 15

those who get more benefits from gov should pay more taxes

Front 16

tax incidence

Back 16

distribution of tax burden among taxpayers

Front 17

proportional taxation and progressive taxation

Back 17

same tax even at differing income levels; tax as a percentage of income increases as income increases

Front 18

marginal tax rate

Back 18

percentage of each additional dollar of income that goes to the tax

Front 19

Regressive taxation

Back 19

tax as a percentage of income decreases as income increases; ex- payroll taxes such as social security where you pay flat tax up to certain amount then it goes down passed that

Front 20

Merchandise trade balance

Back 20

countries exported minus countries imported

Front 21

balance of payments

Back 21

record of all economic transactions during a given period between residents of one country and residents of the rest of the world.

Front 22

Invisible hand and Laissez-faire

Back 22

natural tendency for market forces to promote general welfare and " to let do"

Front 23

Ceteris Paribus

Back 23

"all things are held constant"