Microeconomics LSM Chapter 4

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Terms in this set (...)

What do points on the demand curve represent?
Marginal Benefit
True or False: Competitive markets produce equilibrium prices and quantities that minimize the sum of consumer and producer surplus.
False
Points on the ____ curve represent marginal cost.
Supply
Public goods are distinguished by:
Nonrivalry, Nonexcludability
A ____ to a producer is a payment from the government to decrease the producers' cost in order to encourage more output of a product beneficial to society.
Subsidy
Which of the following would be considered private goods?
Automobiles, Clothing
The supply curve for any good, private or public is:
its marginal-cost curve
When there is no effective way of keeping individuals from the benefit of a good once it comes into existence, the characteristic of the good becomes distinguished by _____.
Nonexcludability.
A deadweight loss declines in size when a unit of output is produced, so that
The maximum willingness to pay exceeds acceptable prices.
Quantity levels less or greater than the efficient quantity create efficiency or deadweight _____.
Losses
True or False: Demand-side failures arise in competitive markets when demand curves fail to reflect consumers' full willingness to pay for a good or service.
True
Characteristics of a private good include:
Excludeability, Rivalry
The _____ characteristic of a private good is the ability of a seller to prevent people who did not pay for a product from obtaining its benefits.
Excludability
A private good that displays _____ characteristics means that when someone buys and consumes that good, it is not available for someone else to buy and consume.
rivalry
If a good is nonrival and nonexcludeable then it is known as a _____ good.
public
_____ in consumption means that one person's consumption of a good does not preclude consumption of the good by others.
Nonrivalry
The situation when people can receive the benefits from a good without having to pay for it is called the ____-rider problem.
Free
When the purchase and consumption of a good makes the purchase and consumption of that good unavailable to another person, it is known as _____.
Rivalry
Which of the following examples exemplifies a rivalrous private good?
Purchasing the last in-stock cell phone at the wireless cell phone store.
_____ means that buyers who are willing and able to pay the market price for the product obtain its benefits, but those unable or unwilling to pay the price do not.
Excludeability.
True or False: Since the total profit from the sale of five bottles of water is $1.00, representing a 20% profit margin, this is a reason to "tap the market."
True
Goods that are provided by competitive markets because they can make a profit are known as _____ goods.
Private
Which of the following are true statements about competitive markets?
A competitive market allocates resources efficiently; A competitive market makes private goods available to consumers.
Which of the following highlight the free-rider problem associated with a public good?
There is no potential for revenue or profits; Non-payers can obtain benefit from the use of a good or service.
The free-rider problem makes it:
Impossible for firms to gather resources and profitably provide a good.
Government can finance the demand for public goods through _____.
Taxation
Examples of public goods include:
Street lighting, national defense.
The government can provide the efficient amount of a public good by adhering to which of the following rules?
Marginal benefit equals marginal cost.
Surveys and public voting enable the government to:
Estimate the demand for public goods.
A deadweight loss is also known as:
An efficiency loss.