MicroEcon Final

what happens to the total surplus in a market when the government imposes a tax?

total surplus decreases

what kinds of goods can be excludable?

private goods and club goods

what is the Coase theorem?

private markets will solve externality problems and allocate resources efficiently as long as private parties can bargain with sufficiently low transaction costs

opportunity cost

whatever is given up to obtain an item

what happens to the equilibrium of a quantity when a tax is placed on a good?

the equilibrium of the quantity decreases

how are collective taxes unlike most other taxes?

they move the allocation of resources closer to the social optimum

Difference between absolute and comparative advantage?

absolute advantage is producing a good with fewer inputs while comparative advantage is producing a good at a lower opportunity cost (whatever is given up to obtain an item).

where do you find producer surplus on a graph?

below the price and above the supply curve

Who will bear the burden of a tax when a tax is imposed on a good for which the supply is relatively elastic and the demand is relatively inelastic?

buyers of the good will bear most of the burden of the tax

can a person have both COMPARATIVE ADVANTAGE for two different products? when?

no, unless both individuals in the scenario have the same opportunity cost.

how does trade raise the economic well-being of a nation?

the gains of the winners exceed the losses of the losers

the consumption of water by local residents that may include pesticide runoff from local farmers' fields is an example of..?

externalities