question
Consumer Burden from a Tax
answer
share of the gov revenue from a tax that is due to the higher price for consumers
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consumer benefit from a subsidy
answer
share of the gov expeditures on a subsidy that is due to the lower price to consumer
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Producer Burden from a Tax
answer
share of the gov revenue from a tax that's due to the lower price for producers
question
Producer's Benefit from a Subsidy
answer
share of the gov expeditures on a subsidy that is due to the higher price to producers
question
Price elasticity of demand
answer
measures the percent change in the quantity demanded from a given percent change in the price of a good
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arc method (mid-point method)- wont be asked for exam
answer
using average of the two values
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elastic demand
answer
percent change in quantity is greater than the percent change in price
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perfectly elastic demand
answer
when the elasticity of demand equals infinity
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inelastic demand
answer
percent change in quantity is less than the percent change in price
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perfectly inelastic demand
answer
when the elasiticity of demand equals 0; demand curve line is vertical
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unit elastic demand
answer
when elasticity of demand equals 1
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income elasticity
answer
shows the percent change in the demand for a good from a given percent change in the consumers income
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cross-price elasticity
answer
shows the percent change in the demand for one good from a given...
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elasticity of supply
answer
shows the percent change in the quantity supplied from a given percent change in the price of the good
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thomas malthus
answer
invented the law of diminishing marginal productivity
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law of diminishing marginal product
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as you add increasing amts of one input to fixed amounts of another, eventually your increase in output occur at a decreasing rate
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production function
answer
showing the various amounts of output that can be produced with varying inputs and the available technology
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total product curve
answer
a graphical representation of the production function
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marginal product
answer
additonal output from using one more unit of a variable input
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average product
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quantity/L
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variable input
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input whose use can be changed in the short run
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fixed input
answer
the input whose use can not be changed in the short run
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implicit costs
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costs that do not involve a transfer of money
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explicit costs
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costs that involve a monetary transaction (implicit and explicit costs are what we call oportunity costs)
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short-run
answer
the time period in which at least one input is fixed
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long-run
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period of time when all inputs are variable
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profits
answer
total revenue - total costs
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total variable costs
answer
costs of your variable inputs- formula: cost per unit x # units of the input used
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total fixed costs
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total costs of the fixed inputs
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total costs
answer
total cost of producing a given level of output
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average variable costs
answer
total variable costs / quantity
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average fixed costs
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total fixed costs / quantity
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average total costs
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total costs / quantity
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marginal costs
answer
the additional costs from producing one more unit
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marginal revenue
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the additional revenue from selling one more unit
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total revenue
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Price x Quantity
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perfect competition
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many buyers and sellers that are all price takers
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price taker
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someone that has no ability to affect the price through their behavior
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shut-down point
answer
price where the losses from producing exactly equal the losses from not producing
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firms supply curve
answer
the marginal cost above the minimum of average variable cost
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long-run average cost curve
answer
outside envelope of the ATC using all possible combinations of inputs
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increasing returns to scale
answer
a given percent change in the use of all inputs results in a greater percent change in the output produced
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constant returns to scale
answer
a given percent change in the use of all inputs results in an equivelant percent change in the output produced
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decreasing returns to scale
answer
a given percent change in the use of all inputs results in a smaller percent change in the output produced
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increasing cost competitive industry
answer
industry where the long run supply curve is upward sloping
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constant cost competitive industry
answer
when the long run supply curve is horizontal
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decreasing cost competitive industry
answer
long run supply curve is downward sloping
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monopoly
answer
market with a single seller of a unique product
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barriers to entry
answer
legal or technical reasons that prevent firms from entering a market
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