Econ Midterm

Minimum wage is an example of

a binding price floor which results in a surplus

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

a corrective tax

When government imposes a binding price ceiling on a competitive market

a shortage of the good arises

A tax added on to the price of a product

can be subtracted from total consumer and supplier surplus

word in latin means "all else equal"

ceteris paribus

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

consumer surplus

when we are discussing events which effect elasticity, we are most likely referring to

determinants

The property of distributing economic prosperity uniformly among the members of society

equality

The impact of one person's actions on the well-being of another

externality

In the circular model of an economy

factors of production are owned by households

Compared to short-term demand, long-term demand for almost all products is

more elastic

In competitive markets

There are many buyers and sellers

A common argument for trade protection is

infant industry argument

When altering the incentives so that people take account of negative effects of their actions, we are

internalizing the externality

A tariff

is a tax on goods produced abroad

The idea that lowering taxes in a high tax environment would actually raise tax revenue

is credited to an economist named Arthur Laffer

Market power and externalities are examples of

market failure

A change in price

results in a change in quantity demanded

The names of the natural gas and oil reserves deep below areas of eastern Ohio and western Pennsylvania are

the Marcellus and Utica reserves

An externality occurs when

the cost to society of producing a product is larger than the cost to producers

The greater the elasticities of supply and demand

the greater the deadweight loss of a tax

The law of Supply states

the quantity supplied of a good rises when the price of the good rises

The amount a buyer will pay for a good

willingness to pay