Microeconomics Final Vocabulary

idea that taxes should be levied on a person according to how well that person can shoulder the burden

ability to produce a good using fewer inputs than another producer

total revanue minus total explicit cost

tendency for the mix of unobserved attributes to become undesirable from the standpoint of an uninformed party

person who is performing act for another person called the principal

math result showing that under certain conditions there is no scheme for aggregating individual preferences into valid set of social preferences

fixed cost divided by quantity output

total revenue divided by the quantity sold

total taxes paid divided by total income

total cost divided by the quantity output

variable cost divided by the quantity output

subfield of economics that integrates the insights of psychology

idea that people should pay taxes based on the benefits they receive from government services

limit of consumption bundles that a consumer can afford

fluctuations in economic activity such as employment and production

equipment and structures used to produce goods and services

group of firms acting in unison

visual model of the economy that shows how dollars flow thorugh markets among household firms

goods that are excludable but not rivals in consumption

agreement among firms in a market about quantities to produce or prices to change

goods that are rivals in consumption but not excludable

ability to produce a good at lower opportunity cost than another product

market with many buyers and sellers trading identitical products so that each buyer and seller is a price taker

two goods for which an increase in the price of one leads to a decrease in the demand for the other

failure of majority rule to produce transitive preferences for society

property whereby long-run average total cost stays the same as the quantity of output changes

amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it

tax designed to induce private decision makers to take account of the social costs that arise from a negative externality

study that compares the costs and benefits to society of providing a public good

measure of how much the Q demanded of one good responds to a change in price of another; computed as % change in Q demanded for first good divided by % change in price of good

fall in total surplus that results from a market distortion (such as tax or monopoly)

graph of the relationship between the price of a good and Q demanded

table that shows the relationship between the price of a good and Q demanded

property whereby the marginal product of an input declines as the quantity of input increases

property whereby long-run average total cost rises as the Q of output increases

strategy that is best for a player in a game regardless of the strategies chosen by the other players

total revenue minus total cost including bost explicit and implicit costs

study of how society manages its scarce resources

property of society getting the most it can from its scarce resources

quantity of output that minimizes average total cost

measure of the responsiveness of Q demanded or Q supplied to one of its determinents

property of distributing aconomic prosperity uniformly among the members of society

situation in which market price has reached the level at which Q supplied equals Q demanded

price that balances Q supplied and Q demanded

Q supplied and Q demanded at equilibrium price

property of a good whereby a person can be prevented from using it

uncompensated impact of one person's actions on the well-being of a bystander

inputs used to produce goods and services

costs that don't vary with Q output produced

person who receives the benefit of a good but avoids paying for it

study of how people behave in strategic situations

idea that taxpayers with similar abilities to pay taxes should pay the same amount

input costs that do not require an outlay of money by the firm

something that induces a person to act

change in consumption that results when a price change moves the consumer to a higher or lower indifference curve

measure of how much the Q demanded of a good responds to a change in consumer's income, computed as % change in Q demanded divided by % change in income

curve that shows consumption bundles that give the consumer the same level of satisfaction

good for which, other things are equal, and increase in income leads to a decrease in demand

increase in overall level of prices in the economy

altering incentives so that people take account of the external effects of their actions

claim that, other things equal, the Q demanded of a good falls when the price of the good rises

claims that, other things equal, the Q supplied of a good will rise when the price rises

claim that the price of any good adjusts to brign the Q supplied and Q demanded into balance

tax that is the same amount for every person

increase in total cost that arises from an extra unit of production

increase in output that arises from an additional unit of input

increase in the amount of output from an additional unit of labor

rate at which a consumer is willing to trade one food for another

change in total revanue from an additional unit sold

extra taxes paid on an additional dollar of income

group of buyers and sellers of a particular good or service

economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services

a situation in which a market left on its own fails to allocate resources efficiently

ability of a single economic actor, or small group of actors, to have a substantial influence on market prices

mathematical result showing that if voters are choosing a point along a line and each voter wants the point closest to his most preferred point, then majority rule will pick the most preffered point of the median voter

study of how households and firms make decisions and how they interact in markets

market structure in which many firms sell products that are similar but not identical

firm that is the sole seller of a product without close substitutes

tendency of a person who is imperfectly monitored to engage in dishonest or otherwise undesirable behavior

a situation in which economic actors interacting with one another each choose their best strategy given the strategies that all the other actors have choosen

monopoly that arises because a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms

good for which, other things equal, an increase in income leads to an increase in demand

claims that attempt to prescribe how the world should be

market structure un which only a few sellers offer similar or identical products

whatever must be given up to obtain some item

two goods with right-angle indifference curves

two goods with straight line indifference curves

study of government using the analytic methodsa of economics

claims that attempt to describe the world as it is

legal maximum on the price at which a good can be sold

business practice of selling the same good at different prices to different customers

measure of how much the Q demand of a good responds to change in the price of the good, computed as he % change in Q demanded divided by the % change in price

measure of how much the Q supplied of a good responds to change in the price of the good, computed as %change in Q supplied divided by the % change in price

legal minimum on the price at which a good can be sold

person for whom another person, called the agent, is performing some act

goods that are both excludable and rival in consumption

amount a seller is paid for a good minus the seller's cost of providing it

relationship between the Q of inputs used to make a good and the Q of output of the good

graph that shows the combo of output that the economy can possibly produce given the available factors of production and the available production technology

total revanue minus total cost

tax for which high income payers pay a larger fraction of their income than low-income payers

ability of an individual to own and exercise control over scarce resources

a tax which high income and low income payers pay the same fraction of income

goods that are neither excludable nor rival in consumption

amount of good that buyers are willing and able to purchase

amount of a good sellers are willing and able to sell

tax which high income payers pay a smaller fraction of their income than low-income payers

property of a good whereby one person's use diminishes other people's use

limited nature of resources

action taken by an uninformed party to induce informed party to reveal information

situation in which Q demanded is higher than Q supplied

action taken by informed party to reveal private information to an uninformed party

2 goods for which an increase in price of one leads to and increase in demand of the other

change in consumption that results when a price change moves the consumer along a given indifference curve to a point with a new marginal rate of substitution

cost that has already been committed and cannot be recovered

graph of relationship between Q supplied and price

table that shows the relationship between the price of a good and Q supplied

situation in which Q supplied is greater than Q demand

manner in which the burden of a tax is shared among participants in a market

market value of inputs a firm uses in production

amount a firm receives for the sale of its output/amount paid by buyers and received by sellers of a good (Price times Q sold)

cost that parties incur in the process of agreeing to and following through on a bargain

marginal product of an input times the price

cost that vary with the Q output

idea that taxpayers with a greater ability to pay taxes should pay larger amounts

study of how the allocation of resources affects economic well-being