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Micro Final Exam
| Term | Definition |
|---|---|
| derived demand | the demand for a resource that depends on the demand for the products it helps to produce |
| substitution effect | a change in the quantity demanded of a consumer good that results from a change in its relative expensiveness cause by a changes in the product's price |
| output effect | the situation in which an increase in the price of one input will increase a firm's production costs and reduce its level of output, thus reducing the demand for other inputs; conversely for a decrease in the price of the input |
| economic rent | the price paid for the use of land and other natural resources, the supply of which is fixed (perfectly inelastic) |
| normal profit | the payment made by a firm to obtain and retain entrepreneurial ability; the minimum income entrepreneurial ability must receive to induce it to perform entrepreneurial functions for a firm |
| usury laws | state laws that specify the maximum legal interest rate which loans can be made |
| minimum wage | the lowest wage that employers may legally pay for an hour of work |
| human capital | the knowledge and skills that make a person productive |
| occupational licensing | group of workers in a given occupation pressure Federal,state, or municipal government to pass a law that says some occupational group (barbers,physicians,lawyers,plumbers) can practice their trade only if they meet certain requirements |
| private good | a good or service that is individually consumed and that can be profitably provided by privately owned firms because they can exclude non payers from receiving the benefits |
| public good | a good or service that is characterized by nonrivalry and nonexcludability;a good or service with these characteristics provided by government |
| cap & trade program | a government strategy for reducing harmful emissions or discharges by placing a limit on their total amounts and then allowing firms to buy and sell the rights to emit or discharge specific amounts within the total limits |
| logrolling | the trading of votes by legislators to secure favorable outcomes on decisions concerning the provision of public goods and quasi-public goods |
| earmarks | narrow, specially designated spending authorizations placed in broad legislation by Senators and Representatives for the purpose of providing benefits to firms and organizations within their constituencies without undergoing the usual evaluation process |
| progressive tax | a tax whose average tax rate increases as the taxpayer's income increases and decreases as the taxpayer's income decreases |
| regressive tax | a tax whose average tax rate decreases as the taxpayer's income increases and increases as the taxpayer's income decreases |
| proportional tax | a tax whose average tax rate remains constant as the taxpayer's income increases or decreases |
| horizontal merger | the merger into a single firm of two firms producing the same product and selling it in the same geographic market |
| vertical merger | the merger of one or more firms engaged in different stages of the production of a final product |
| conglomerate merger | the merger of a firm in one industry with a firm in another industry (with a firm that is not a supplier, customer, or competitor) |
| natural monopoly | an industry in which economies of scale are so great that single firm can produce the product at a lower average total cost than would be possible if more than one firm produced the product |
| farm commodities | agricultural products such as grains, milk, cattle, fruits, and vegetables that are usually sold to processors, who use the products as inputs in creating food products |
| food products | processed agricultural commodities sold through grocery stores and restaurants. Examples: bread, meat, fish, chicken,pork, lettuce, peanut butter and breakfast cereal |
| price supports | a minimum price that the government allows sellers to receive for a good or service; a legally established or maintained minimum price |
| statistical discrimination | the practice of judging an individual on the basis of the average characteristics of the group to which he or she belongs rather than on his or her own personal characteristics |
| occupational segregation | the crowding of women or minorities into less desirable, lower-paying occupations |
| income equality | the unequal distribution of an economy's total income among households or families |
| deductible | the dollar sum of costs that an insured must pay before the insurer begins to pay |
| copayment | the percentage of costs that an insured individual pays while the insurer pays the remainder |
| fee for service | in the healthcare industry, payment to physicians for each visit made or procedure performed rather than payment as an annual salary |
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