Microeconomics 2306 Review

A labor market in which there is both a labor union and a monopsonist.

A type of monopoly which usually involves only 1 firm and a unique product.

single seller (of an output, typically)

Single buyer (of an input, typically)

"this for that."

The issue of intransitivity

It is impossible to devise a voting scheme which
satisfies all elements of a set criteria including:
● Transitivity
● Free of irrelevant outcomes
● Free of dictators

aka "quid pro quo"

In a pairwise election, the voter in the middle always gets
their own way.

a form of government failure that occurs when a regulatory
agency, created to act in the public interest, instead advances the commercial or political concerns of special interest groups that dominate the industry or sector it is charged with regulating.

when the agent acts on his behalf, instead of the behalf of the principal.

going back and forth between public and private sectors. Might be good for an individual, but not good for society.

the practice of charging higher prices to one group of consumers to subsidize lower prices for another group.

a case in which the lack of government intervention causes too much (or not enough) of a good to be produced at a price which is not socially optimal

Father of public choice theory

Father of regulation

raise wage rate by "excluding" workers from the profession

Supply curve shifts to the left as number of laborers drops. As a result, wages rise.

mandates a certain wage rate above the equilibrium wage rate.

Results in a surplus (a.k.a unemployment)

A reason for government intervention. Used as a way to prevent monopolies

The cost (or benefit) incurred by a third party to a transaction

a market failure that occurs when people take advantage of being able to use a common resource, or collective good, without paying for it, as is the case when citizens of a country utilize public goods without paying their fair share in taxes.

non-exclusive, non-rival goods.

A progressive tax is a tax that takes a larger percentage from
high-income earners than it does from low-income individuals. (soak the rich)

a tax that takes a larger percentage of income from low-income
earners than from high-income earners (soak the poor)

an income tax system where the same percentage of tax is levied
from all taxpayers, regardless of their income (equal percentage)

Safety (OSHA) & Environment (EPA)

the cost advantage that arises with increased output of a
product

double inputs, output becomes less than double

double inputs, output exactly doubles

Increase in long-term average cost of production as the
scale of operations increases beyond a certain level

double inputs, output becomes more than double

Monopolistic competition

Allocative efficiency

Differentiated product

Income effect > substitution effect

the carrot represents the dangling incentives, while the stick represents the penalty. Example: companies trying to work around a pollution limit

the ability of a party (an individual, or firm, or country) to produce a greater quantity of a good, product, or service than competitors, using the same amount of resources.

an economic law referring to the ability of any given economic actor to produce goods and services at a lower opportunity cost than other economic actors.

the maximum benefit gained by either side of a transaction while the other side neither gains nor loses.

refers to net benefits to agents from allowing an increase in voluntary trading with each other.

When the price is greater than AVC

MRPL/PL=MRPK/PK

P=MC

P=MinATC

MRP=MRC

AR=TR/Q

MPL=ΔQ/ΔL or MPK= ΔQ/ΔK

MRP=ΔTR/ΔL=MR*MPL

Perfectly inelastic

Differentiated products

Ronald Coase

Closed economy, open economy, tariff, and quota

P>ATC

P=ATC

The price maker sets the prices (monopoly) whereas the price taker has to accept whatever price is in the market. (Perfect Competition firms)

TR-TC or Q(P-ATC)

The elasticity tells whether the consumer or the producer pays more for the tax. The more inelastic the product is the consumer pays more for the tax where the more elastic the product is the producer has to pay the tax.

Flow is measured over time. EX: calories consumed in a day. Stock is measured at a particular time. EX: Weight

There will be no basis for trade if the slopes are the same.

David Ricardo

Adam Smith

A payment of any factor of production in excess of what is necessary to call forth the desired supply.