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15 Cards in this Set
- Front
- Back
Marginal private benefit curve
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a curve which represents the value that consumers place on marginal units of the good or service; the demand curve.
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Consumers’ surplus
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the difference between what consumers are willing to pay for a given quantity of a good or service (total consumer valuation) and what they have to pay (total expenditure).
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Marginal private cost curve
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a curve showing the marginal cost to society of producing additional units of a good or service; the supply curve
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Producers’ surplus
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the difference between the total revenue to producers from selling a given quantity of a good or service and the total cost to them of using the scarce resources in that production
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Economic efficiency
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the allocation of resources that allows maximum benefit to be achieved at minimum cost.
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Economic system
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the part of the social system determining what, how, and for whom goods and services are produced (also called the three basic economic questions).
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Pure capitalism
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an economic system in which most resources are owned and relevant decisions are made by private individuals
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Pure communism
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an economic system in which most productive resources are publicly owned (state ownership).
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Socialism
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an economic system in which most nonhuman productive resources are state-owned.
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The Three Economic Functions of Government
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1 To ensure and enforce private property rights
2 To provide public goods 3 To control and correct externalities through law and regulation |
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Public good
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a good such that, once produced, one individual’s consumption of the good does not reduce or exclude the ability of other individuals to consume the good.
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Free rider
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an individual who receives the benefit of consuming a public good or service without paying for it.
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Externalities
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benefits or costs of an individual’s activity that the individual does not receive or bear; benefits or costs borne by a third party.
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Externalities pos and neg
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positive (health care and education) or negative (pollution and drunken driving).
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Antitrust policies
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regulations established by laws and government agencies that attempt to preserve business competition.
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