Microeconomics

Front 1

economic principle of satiation

Back 1

the effect whereby the more of a good one possesses the less one is willing to give up in order to get more of it. This effect is caused by diminishing marginal utility

Front 2

Pareto efficiency, or Pareto optimality

Back 2

In a Pareto efficient economic system no allocation of given goods can be made without making at least one individual worse off.

Hint 2

Given an initial allocation of goods among a set of individuals, a change to a different allocation that makes at least one individual better off without making any other individual worse off is called a Pareto improvement. An allocation is defined as "Pareto efficient" or "Pareto optimal" when no further Pareto improvements can be made.

Front 3

Moral Hazard

Back 3

A situation where the behavior of one party may change to the detriment of another after the transaction has taken place. Moral hazard can be divided into two types when it involves asymmetric information (or lack of verifiability) of the outcome of a random event. An ex-ante moral hazard is a change in behavior prior to the outcome of the random event, whereas ex-post involves behavior after the outcome

Hint 3

For example, a person with insurance against automobile theft may be less cautious about locking their car. It has long been recognized that a problem of moral hazard may arise when individuals engage in risk sharing under conditions such that their privately taken actions affect the probability distribution of the outcome.

Front 4

Walrasian Equilibrium (General Equilibrium)

Back 4

It explains the behavior of supply, demand, and prices in a whole economy with several or many interacting markets, by seeking to prove that a set of prices exists that will result in an overall equilibrium, in contrast to partial equilibrium, which only analyzes single markets.

Hint 4

There are two fundamental theorem of welfare economics and some condition to guarantee the existence of equilibrium.

Front 5

Rent Seeking

Back 5

People are said to seek rents when they try to obtain benefits for themselves through the political arena. In another word, People seeks rent is trying to increase their share of wealth in a society without creating new wealth.

Hint 5

"Rent" means the payment to a factor of production in excess of what is required to keep that factor in its present use.

Front 6

Rent Seeking

Back 6

People are said to seek rents when they try to obtain benefits for themselves through the political arena. In another word, People seeks rent is trying to increase their share of wealth in a society without creating new wealth.

Hint 6

"Rent" means the payment to a factor of production in excess of what is required to keep that factor in its present use. However, in economics term for "rent seeking", "rent" actually is meant for "privilege". When asking for a raise, the "raise" fits the description, but it is not the "rent" in "rent seeking".