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Midterm

TEST 2 Vocab Notes And Labs FALL 2011 (Got A+ on the test)

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Department
Economics
Course
ECON 2030
Professor
All Professors
Semester
Fall

Description
ECON 2030 TEST 2WILL BE ON CHAPTERS 8 9 12 14 15 AND 21Chapter 8 Taxation and Government Intervention Vocabulary1Consumer surplus the value the consumer gets from buying a product less its price The difference between what consumers would have been willing to pay and what they actually pay2Deadweight lossthe loss of consumer andproducer surplus from a tax3Excise taxa tax that is levied on a specific good4General rule of political economy when small groups are helped by a government action and large groups are hurt by that same action the small group tends to lobby far more effectively than the large group5Price ceiling a government imposed limit on how high a price can be charged In other words a government set price below the market equilibrium price6Price floora government imposed limit on how low a price can be charged In other words a government set price above equilibrium price7Producer surplus price the producer sells a product for less the cost of producing it8Public choice economist an economist who integrates an economic analysis of politics with an analysis of the economy9Rent seeking activity activity designed to transfer surplus from one group to another10Welfare loss trianglea geometric representation of the welfare cost in terms of misallocated resources caused by a deviation from a supplydemand equilibriumChapter 9 International Trade Policy Comparative Advantage and OutsourcingVocab1Balance of trade the difference between the value of the goods and services a country imports and the value of the goods and services it exports2Comparative advantage the ability to be better suited to the production of one good then to the production of another good3Economies of scale situation when longrun total costs decrease as output increases4Embargo a toal restriction on the import or export of a good5Free trade association a group of countries that have reduced or eliminated trade barriers among themselves6General Agreement on Tarrifs and Trade GATT a regular international conference to reduce trade barriers held from 1947 to 1995 It has been replaced by the World Trade Organized WTO7Infant industry argument the argument that with initial protection an industry will be able to become competitive8Inherent comparative advantagecompariative advantage that is based on factors that are relatively unchangeable9Learning by doing as we do something we learn what works and what doesnt and over time we become more proficient at it Also to improve the methods of production through experience10Mostfavored nationa country that will be charged as a low tariff on its exports as any other country11Quotaa quantity limit placed on imports12Regulatory trade restriction government imposed procedural rules that limit imports13Strategic bargainingdemanding a larger share of gains from trade than you can reasonably expect14Strategic trade policythreatening to implement tariffs to bring about a reduction in tariffs or some other concession from the other country15Tariff an excise tax on an imported internationally traded good16Trade adjustment assistance program programs designed to compensate losers for reductions in trade restrictions17Transferable comparative advantage comparative advantage based on factors that can change relatively easily18World Trade Organization WTO an organization committed to getting countries to agree not to impose new tariffs or other trade resrictions except under certain limited conditions Chapter 12 Production and Cost Analysis IVocabulary1Average fixed cost fixed cost divided by quantity produced2Average productOutput per worker3Average total costtotal cost divided by the quantity produced4Average variable cost variable cost divided by quantity produced5Economic profit explicit and implicit revenue minus explicit and implicit cost Also a return on entrepreneurship above and beyond a normal profit6Firm an economic institution that transforms factors of production into goods and services7Fixed cost costs that are spent and cannot be changed in the period of time under consideration8Law of diminishing marginal productivity as more and more of a variable input are added to an existing fixed input eventually the additional output gets from that additional input is going to fall Also increasing one input keeping all others constant will lead to smaller and smaller gains in output9Longrun decision a decision in which a firm chooses among all possible production techniques10Marginal cost additional cost over and above the costs increasing or decreasing the level of output by one unit Also the change in total cost associated with a change in quantity11Marginal product the additional output that will be forthcoming from an additional worker other inputs constant12Production the transformation of factors into goods and services13Production functionthe relationship between the inputs factors of production and outputs
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