Externalities and Public Goods in Economics Study Guide
Learn about externalities, including negative and positive externalities, and how they lead to market failures. Understand public goods, the free-rider problem, and the tragedy of the commons, along with strategies for managing these economic concepts.
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Understanding Price, Income, and Cross-Price Elasticity
Price Elasticity of Demand and Supply
Elasticity measures the responsiveness of consumer desires or quantity supplied to changes in price.
- Price Elasticity of Demand (PEoD)
- Determinants of Elasticity
- Midpoint Method
- Elastic vs. Inelastic Demand
- Price Elasticity of Supply (PES)
- Linear Demand Curve Slope
Income and Cross-Price Elasticity of Demand
Measures the response of quantity demanded to changes in consumer income and the price of another good.
- Income elasticity of demand
- Inferior good
- Normal good (necessity)
- Normal good (luxury)
- Cross-price elasticity
- Substitute goods
- Complementary goods
Analyzing Price Controls and Market Interventions
Introduction to Price Control Mechanisms
A study of government mandated prices including price ceilings and price floors and their impact on market equilibrium.
- price control
- price ceiling
- price floor
- market equilibrium
- total surplus
- deadweight loss
- binding price control
- scarcity
- hyperinflation
Economic Impacts of Price Ceilings
An analysis of how binding price ceilings, specifically rent control, create market shortages, deadweight loss, and non-price competition.
- Price ceiling
- Binding price ceiling
- Rent control
- Equilibrium price
- Quantity supplied
- Quantity demanded
- Shortage
- Deadweight loss
- Black market
- Non-price competition
- Wasted resources
- Mobility
Economic Impacts of Rent Control
An analysis of rent regulation policies, their effects on housing supply, and economic alternatives for improving affordability.
- rent control
- rent stabilization
- price ceiling
- housing supply
- gentrification
- equilibrium price
- tax abatement
- market shortage
Externalities, Public Goods, and Environmental Pollution
Externalities and Public Goods
This content examines externalities and public goods through the costs of environmental pollution and the optimal quantity of pollution where MC = MB.
- Externalities
- Public Goods
- Costs of Environmental Pollution
- Optimal quantity of pollution
- MC = MB
Externalities and Public Goods in Economics
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Understanding Monopolies and Natural Monopolies
Market Structures and Natural Monopolies
This content examines different market structures, specifically focusing on monopolies with high barriers to entry and the cost structures of natural monopolies.
- market structures
- monopolies
- barriers to entry
- natural monopoly
- cost structure
- fixed cost
- variable cost
- average total cost curve
- regulation
The Five Foundations of Economics
Economic Foundations of Decision Making
This topic explores economic foundations including trade-offs, opportunity cost, marginal thinking, and trade.
- Trade-offs
- Opportunity Cost
- Value of Time
- Marginal Thinking
- Specialization
- Comparative Advantage
Laws of Demand, Supply, and Equilibrium
Market Equilibrium and Price Dynamics
Markets coordinate prices to eliminate excess supply and excess demand through the interaction of quantity demanded and quantity supplied.
- Market Equilibrium
- Surplus
- Shortage
- Quantity Demanded
- Quantity Supplied
- Supply and Demand Shifts
Market Efficiency, Taxes, and Surplus
Market Efficiency and Tax Impacts
An analysis of market efficiency, consumer surplus, and the effects of taxes and subsidies on equilibrium price and quantity.
- market efficiency
- consumer surplus
- producer surplus
- equilibrium price
- equilibrium quantity
- tax
- subsidy
- price function
- supply curve
- demand curve
Introduction to Linear Models and Relationships
Understanding Linear Regression and Model Building
This lesson covers building linear models to interpret relationships between variables, calculating coefficients, and evaluating model performance using residuals and R-squared.
- linear regression
- linear models
- coefficients
- intercept
- slope
- error term
- machine learning
- scatter plot
- predictive modeling
- residuals
- root mean squared error
- sigma
- residual standard error
- variation
Impact of Price Ceilings and Floors
Economic Impacts of Price Control
An analysis of how price ceilings and price floors interact with market equilibrium and economic efficiency.
- Price control
- Equilibrium price
- Price ceiling
- Price floor
- Binding equilibrium
- Shortages
- Economic efficiency
Understanding Price Controls and Market Impacts
Economic Effects of Price Floors
The minimum wage acts as a price floor that can lead to unintended consequences such as unemployment.
- Price floors
- Minimum wage
- Binding minimum wage
- Unemployment
- Quantity demanded for labor
- Quantity supplied of labor
- Elasticity
- Capital investment
- CBO projection
The Economic Effects of Price Floors: Understanding the Minimum Wage
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Understanding and Correcting Market Externalities
Externalities and Market Failure
Market failure occurs when social benefits or costs differ from private benefits or costs, creating externalities that require internalization to achieve efficient allocation.
- Externalities
- Market failure
- Negative Externalities
- Positive Externalities
- Internalizing external costs
- Regulations
- Taxes
- Private negotiation
- Property Rights
- Transaction costs
- Social equilibrium
- Market equilibrium
- Deadweight loss
Monopoly Emergence and Profit Maximization
Monopoly Market Structures and Pricing
Monopolies emerge through natural monopolies, control over an essential resource, or government created monopolies, facing a downward demand curve and tension between the price effect and output effect.
- natural monopolies
- control over an essential resource
- government created monopoly
- downward sloping demand curve
- marginal revenue
- marginal cost
- price effect
- output effect
- profit maximizing
- average total cost
Monopoly Pricing and Profit Maximization
A monopolist determines profit maximizing quantity where marginal revenue equals marginal cost while considering the tension between the output effect and the price effect.
- marginal revenue
- marginal cost
- demand curve
- output effect
- price effect
- profit maximization
- average total cost
- monopolist
Monopolist Pricing and Profit Maximization
A monopolist determines profit maximizing quantity where marginal revenue equals marginal cost and uses the demand curve to find price.
- marginal revenue
- marginal cost
- demand curve
- average total cost
- output effect
- price effect
- profit maximizing
- monopolist
Monopoly Pricing and Production Decisions
A discussion on how a monopolist determines profit maximizing quantity and price by considering the tension between the output effect and the price effect.
- marginal revenue
- marginal cost
- demand curve
- output effect
- price effect
- profit maximization
- average total cost
- monopolist
Opportunity Cost, Comparative Advantage, and Economic Incentives
Fundamental Economic Principles and Decision Making
This content explores opportunity cost, comparative advantage, production possibilities frontiers, and marginal analysis.
- Opportunity Cost
- Comparative Advantage
- Absolute Advantage
- Terms of Trade
- Production Possibilities Frontier (PPF)
- Marginal Benefit
- Marginal Cost
- Incentives
- Unintended Consequences
Types of Goods and the Commons
Classification and Management of Economic Goods
Definitions of non-rival and non-excludable goods explain the four types of goods, free-riding, and the tragedy of the commons.
- Non-rival
- Non-excludable
- Private Good
- Club Good
- Common Resource
- Public Good
- Free-rider
- Tragedy of the commons
- Tiered-Pricing
Economies of Scale and Long-run Efficiency
Long-Run Efficiency and Economies of Scale
The long-run cost of providing additional output is known as scale, involving economies of scale, constant economies of scale, and diseconomies of scale.
- Economies of Scale
- Constant Economies of Scale
- Diseconomies of Scale
- Long-run Efficiency
- Scale
- Efficient Scale
- Learning by doing
- Technology
- Bulk buying
- Transportation
- Management issues
Monopoly Power and Market Defects
Monopoly Markets and Market Power
This content examines monopoly power, including its defects, rent seeking behavior, and regulatory solutions, while also introducing monopsonies.
- monopoly power
- downward sloping demand curve
- marginal revenue
- marginal cost
- profit maximizing price
- defects of monopoly
- reduction in competitiveness
- barriers to entry
- rent seeking behavior
- deadweight loss
- natural monopoly
- cost of service regulation
- monopsony
- labor markets
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