microeconomics final

a group of buyers and sellers of a particular good or service

a market in which there are many buyers and many sellers so that each has a negligible impact on the market price

only one seller in a market

the amount of a good that buyers are willing and able to purchase

the claim that. other things equal, the quantity demanded of a good falls when the price of the good rises

a table that shows the relationship between the price of a good and the quantity demanded

a graph of the relationship between the price of a good and the quantity demandedma

the sum of all the individual demands for a particular good or service

a good for which, other things equal, an increase in income leads to an increase in demand

a good for which, other things equal, an increase in income leads to a decrease in demand

two good for which an increase in the price of one leads to an increase in the demand for the other

two goods for which an increase in the price of one leads to a decrease in the demand for the other

the amount of a good that sellers are willing and able to sell

that claim that, other things equal, the quantity supplied of a good rises when the price of the good rises

a table that shows the relationship between the price of a good and the quantity supplied

a graph of the relationship between the price of a good and the quantity supplied

the market reaches a point where quantity supplied is equal to quantity demanded

the quantity supplied and the quantity demanded at the equilibrium price

the price that balances quantity supplied and quantity demanded

so many buyers and sellers that no one can affect the market price —> each is a price taker

the claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded for that good into balance

a measure of the responsiveness of quantity demanded or quantity supplied to one of its determinants

a measure of how much the quantity demanded of a good responds to a change in the price of the good, computed as the percentage change in quantity demanded divided by the percentage change in price

percentage change in quantity demanded / percentage change in price

the amount paid by buyers and received by sellers of a good, computed as the price of the good times the quantity sold

percentage change in quantity demanded / percentage change in income

a measure of how much time the quantity demanded of a good responds to a change in consumers’ income, computed as the percentage change in quantity demanded divided by the percentage change in income

percentage change in quantity demanded good 1 / percentage change in the price of good 2

a measure of how much the quantity demanded of one good responds to a change in the price of another good, computed as the percentage change in quantity demanded of the first good divided by the percentage change in the price of the second good.

a measure of how much the quantity supplied of a good responds to a change in the price of that good, computed as the percentage change in quantity sipplied divided by the percentage change in price

a legal maximum on the price at which a good can be sold

a legal minimum on the price at which a good can be sold

who in the market will bear the burden of the tax

the ceiling is a binding constraint because the forces of supply and demand tend to move the price towards equilibrium price, but when the market price hits the ceiling, it can, by law, rise no further

the maximum amoutn that a buyer will pay for a good

the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it

the value of everything a seller must give up to produce a good

the amount a seller is paid for a good minus the seller’s cost of providing it

the property of a resource allocation of maximizing the total surplus received by all members of society

value to buyers - amount paid by buyers

amount receieved by sellers - cost to sellers

(value to buyers - amount paid by buyers) + (Amount received by sellers - cost to sellers)

the property of distributing economic prosperity uniformly among the members of society

one without government intervention or regulation

1. free markets allocate the supply of goods to the buyers who value them most highly, as measured by their willingness to pay

2. free markets allocate the demand for goods to the sellers who can produce them at the lowest cost

3. free markets produce the quantity of goods that maximizes the sum of consumer and producer surplus

the policy of leaving well enough alone (not interfering)

the ability to influence prices

to distribute for a particular purpose

the fall in total surplus that results from a market distortion, such as a tax

engaging in illegal economic activity, to evade taxes

the price of a good that prevails in the world market for that good

a tax on goods produced abroad and sold domestically

a quantitative limit on imports of a good

the uncompensated impact of one person’s actions on the well-being of a bystander

altering incentives so that people take account of the external effects of their actions

government intervention in the economy that aims to promote technology-enhancing industries

the theoretical and legal ownership of resources and how they can be used

• command-and-control policies

  • market-based policies

regulate behavior directly

provide incentives so that private decision makers will choose to solve the problem on their own

a tax designed to induce private decision makers to take account of the social costs that arise from a negative externality

the proposition that if private parties can bargain without cost over the allocation of resources, they can solve the problem of externalities on their own

the coasts that parties incur in the process of agreeing toa nd following through on a bargain

a person can be prevented from using it (fish tacos and wireless internet access)

people cant be prevented from using it (FM radio signals and national defense)

one person’s use of it diminishes others’ use

can only be possesed or consumed by one person

an MP3 file of someone’s latest single. — can be consumed over and over again

excludable, rival in consumption (food)

not excludable, not rival (national defense)

rival but not excludable (fish in the ocean)

excludable but not rival (cable TV)

a person who receives the benefit of a good but avoids paying for it

a study that compares the costs and benefits of providing a public good

the property of a good whereby a person can be prevented from using it

the property of a good whereby one person’s use diminishes other people’s use

a parable that illustrates why common resources are used more than is desirable from the standpoint of society as a whole

• privatization

• command and control

• taxing

the taxrate applied to each additional dollar of income

a tax on the wages that a firm pays its workers

a business that is set up as a seperate legal entity

are taxes on specific goods

a government payment not made in exchange for a good or service

an excess of government spending over government spending

the extra taxes paid on an additonal dollar of income

a tax that is the same amount for every person

the idea that people should pay taxes based on the benefits they receive from government services

the idea that taxes should be levied on a person according to how well that person can shoulder the burden

the idea that taxpayers with a greater ability to pay taxes, should pay larger amounts

the idea that taxpayers with similar abilities to pay taxes should pay the same amount

a tax for which high income and low income taxpayers pay the same fraction of income

a tax for which high income taxpayers pay a smaller fraction of their income than do low income taxpayers

a tax for which high income taxpayers pay a larger fraction of their income than do low income taxpayers

fails to allocate resources efficiently

the maximum amount a consumer is willing to pay for an additional good or service or the additional satisfaction experienced when purchasing

the amount a firm receives for the sale of its output

the market value of the inputs a firm uses in production

TR - TC

input costs that require an outlay of money by the firm (recorded in the books)

input costs that do not require an outlay of money by the firm (not recorded in the books)