Chapter 5 Micro Definitions Turbo Round

Ad-valorem tax: A tax levied on a commodity set as a ??? of the selling price

A situation in which a person at risk is more likely to take out insurance

• Adverse selection

• Moral hazard

• Asymmetric information

• Systemic risk

Prices can ultimately help to allocate scarce resources amongst competing uses

• Allocating function of prices

• Incentive function of prices

• Rationing function of prices

• Signalling function of prices

Achieved when consumer satisfaction is maximised where demand equals supply and price is equal to marginal cost of production

• Minimised; supply; cost

• Maximised; demand; revenue

• Maximised; supply; cost

• Maximised; supply; revenue

A situation in which some participants in a market have better information about market conditions than others

• Adverse selection

• Moral hazard

• Asymmetric information

• Systemic risk

Competition Policy: Policies that aim to promote ??? based upon the idea that competitive markets are central to investment, efficiency, innovation, and growth

A good that brings less benefit to consumers than they realise (such that too much will be consumed by individuals in a free market as ???>???)

• MSB > MPB

• MPC > MSC

• MSC > MSB

• MSB > MSC

??? Tax: One that taxes the income of people and firms and must be paid (income and corporation tax)

Economic efficiency (static efficiency): A situation in which both ??? efficiency and ??? efficiency have been achieved

• Productive & Dynamic

• Dynamic & Pareto

• Allocative & Productive

• Dynamic & Allocative

External benefit: The benefits that are the consequence of externalities to ??? parties

• First

• Second

• Third

• Fourth