the rational rule for society
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produce until marginal social benefit equals marginal social cost
market economy
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use prices that provide incentives
deadweight loss is greater when...
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supply and demand are more elastic
positive analysis
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- describes what is going to happen
- objective statements
- describes and forecasts the effects of the policy
no matter who bears the statutory incidence...
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economic incidence is always the same
deadweight loss
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- loss of economic surplus
- producing more than will be purchased by consumers
- producing less than consumers will purchase
- difference between the largest possible economic surplus and the actual
economic surplus
, irrationality
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people systematically making errors that lead them to not follow marginal
benefits/costs
positive externality
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- side effects benefits bystanders
- lead to underproduction
corrective tax
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- can solve negative externalities
- changes marginal cost and forces the equilibrium quantity to align with
the socially optimal quantity
special-interest legislation
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introduced by lawmakers at the request of the group that stands to benefit
- concentrates benefits to them
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produce until marginal social benefit equals marginal social cost
market economy
Give this one a try later!
use prices that provide incentives
deadweight loss is greater when...
,Give this one a try later!
supply and demand are more elastic
positive analysis
Give this one a try later!
- describes what is going to happen
- objective statements
- describes and forecasts the effects of the policy
no matter who bears the statutory incidence...
Give this one a try later!
economic incidence is always the same
deadweight loss
Give this one a try later!
- loss of economic surplus
- producing more than will be purchased by consumers
- producing less than consumers will purchase
- difference between the largest possible economic surplus and the actual
economic surplus
, irrationality
Give this one a try later!
people systematically making errors that lead them to not follow marginal
benefits/costs
positive externality
Give this one a try later!
- side effects benefits bystanders
- lead to underproduction
corrective tax
Give this one a try later!
- can solve negative externalities
- changes marginal cost and forces the equilibrium quantity to align with
the socially optimal quantity
special-interest legislation
Give this one a try later!
introduced by lawmakers at the request of the group that stands to benefit
- concentrates benefits to them
