Econ

allocative efficiency

Producing the optimal quantity of some output

Bundling can increase efficiency especially when:

fixed costs are high and marginal costs are low.

tax incidence

the division of the burden of a tax between buyers and sellers

Tax and subsidy both

Create deadweight, depend on relative elasticities, and change equilibrium level of output

Deregulation

Elimination or reduction of government restrictions on firms who want to enter a market, prices charged, quantities produced

To be efficient, revenue from taxation must provide goods that have benefits that _____ the deadweight loss caused by the taxation itself

Exceed

Subsidies

Government pays a firm directly or reduces the firms taxes if the firm does something

Because price discrimination can cause a firm to _____ this means the practice can _____ social surplus

Increase output, increase

wage subsidy

Increases demand for labor,

Greatest efficiency of bundling occurs when marginal costs are _____ and fixed costs are ____

Low, high

What can allow the monopolist to decrease the magnitude of deadweight loss

Perfect price discrimination

Whoever pays the greater amount of a commodity tax is determined by

Relative elasticities of demand and supply

Deadweight loss attributed to monopoly

Rightmost triangle between lines

The imposition of a goods tax on producers/sellers shifts the____ curve _____ by the amount of the per unit tax

Supply, up

optimal quantity

The quantity where the marginal benefit to society of one more unit just equals marginal cost

Price discrimination is considered bad when

Total surplus decreases

Consumer surplus under monopoly

Triangle made by top of square

Difference between tying and bundling

Tying does not require purchase of both goods

Total surplus increases with practice of price discrimination only if

output increases

whoever bears burden of tax

receives the benefit of a subsidy

Barriers to entry

the legal, technological, or market forces that may discourage or prevent potential competitors from entering a market

Consumer surplus under competition

Big triangle