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Second Micro Test Flash Cards

Quiz yourself by thinking what should be in each of the black spaces below before clicking on it to display the answer.
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Term
Definition
Excise Tax   tax on a good or service (dollar amount per unit)  
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Tax Incidence   Who really pays the burden of a tax (more inelastic=higher burden)  
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Proportional tax   everyone pays the same percentage of income  
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Regressive tax   larger percentage of income paid by lower income earners  
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Autarky   country does not trade with other countries  
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Factor endowments   mix of available factors of production  
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factor intensity   measure of which factor is used in greatest proportion in the production of a good  
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hecksher-ohlin theorem (difference in factor endownment)   A country has comparative advantage in a good whose production is intensive in the factor that is abundant (lots of labor=advantage in production that requires lots of labor  
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Sources of comparative advantage   differences in climate, differences in technology, differences in factor endowments  
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Tariff   tax on import (raises price for domestic consumer)  
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Consumer surplus, producer surplus   exports increase producer surplus and decrease consumer surplus total  
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surplus increases   net gain to economy tariffs increase producer surplus, decrease consumer surplus, increase government revenue and result in deadweight loss  
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explicit costs   actually laying out money (direct costs)  
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implicit costs   does not require outlay of money, measured by the dollar value of benefits that are forgone (indirect costs, opportunity costs)  
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Accounting Profit   revenue-explicit-depreication  
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Economic Profit   revenue-explicit-depreciation-implicit  
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Marginal Cost   additional cost incurred by producing one more unit of that good or service  
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Marginal Benefit   additional benefit derived from producing one more unit of that good or service  
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Behavioral Economics   brand of economics that combines economic modeling with psychology (people make less than perfect economic decisions)  
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Common mistakes in decision making   misperceving opp costs, being overconfident, having unrealistic expectations about future, countering dollars unequally, being loss averse, having a bis towards status quo  
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Utility   measure of satisfaction the consumer derives from consumption of bundle of goods and services  
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Principle of diminishing marginal utility   each successive unit of good or service consumed adds less to total utility than did the previous  
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Budget Line   shows the consumption bundles available to a consumer who spends all income  
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Created by: sshaw1
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