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Yura Park
Principles of microeconomics
| Question | Answer |
|---|---|
| Deadweight loss | the fall in total surplus that results from a market distortion, such as a tax |
| World price | the price of a good that prevails in the world market for that good |
| tariff | a tax on goods produced abroad and sold domestically |
| Externality | the uncompensated impact of one person's actions on the well-being of a bystander |
| internalizing the externality | altering incentives so that people take account of the external effects of their actions |
| Coase theorem | 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 |
| transaction costs | the costs that parties incur in the process of agreeing to and following through on a bargain |
| corrective tax | a tax designed to induce private decision makers to take account of the social costs that arise from a negative externality |
| Scarcity | the limited nature of society's resources |
| economics | the study of how society manages its scarce resources |
| efficiency | the property of society getting the most it can from its scarce resources |
| equity | the property of distributing economic prosperity fairly among the members of society |
| opportunity cost | whatever must be given up to obtain some item |
| rational people | people who systematically and purposefully do the best they can to achieve their objectives |
| marginal changes | small incremental adjustments to a plan of action |
| incentive | soemthing that induces a person to act |
| market economy | an economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services |
| property rights | the ability of an individual to own and exercise control over scarce resources |
| market failure | a situation in which a market left on its own fails to allocate resources efficiently |
| externality | the impact of one person's actions on the well-being of a bystander |
| market power | the ability of a single economic actor(or small group of actos) to have a substantial influence on market prices |
| productivity | the quantity of goods and services produced from each hour of a worker's time |
| inflation | an increase in the overall level of prices in the economy |
| business cycle | fluctuations in economic activity, such as employment and production |
| circular-flow diagram | a visual model of the economy that shows how dollars flow through markets among households and firms |
| ppf | a graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology |
| microeconomics | the study of how households and firms make decisions and how they interact in markets |
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