G202 Kreft Exam 1
1. Rules for obtaining the so- 1. produce and sell where consumer value is greater than
cially efficient level of produc- cost
tion (Qe), where marginal val- 2. avoid producing and selling where consumer value is less
ue equals marginal cost: than cost
2. consumer surplus difference between what customers are willing to pay (based
on value) and the price they have to pay
3. producer surplus the difference between the lowest price a firm would be
willing to accept for a good or service and the price it actually
receives
4. Below Qe (socially efficient giving up producing some units that are valued more than
output) their productive costs (net benefit given up by society, under-
production)
5. Above Qe producing in range when units are valued less than their
productive costs
(Net cost on society, overproduction)
6. Taxes imposed on sellers cause an inward shift of the supply curve ( decreased supply)
by increasing production costs
7. Pseller (after tax) = Pbuyer-tax amt
8. General results of a tax -gov revenue collected, increased price to buyers (consumer
surplus decreases) -decreased price to sellers (producer sur-
plus decreases)
-reduced quantity bought and sold
9. Subsidies given to sellers an outward shift of supply curve (underproduction so in-
cause creased supply) by decreasing production costs
, G202 Kreft Exam 1
10. General results of a subsidy -decreased price to buyers (consumer surplus increases),
-increased price to buyers (producer surplus increases), -in-
creased quantity bought and sold
11. Product Regulation on sellers an inward shift of supply curve (overproduction, so decreased
(acts like a tax) causes... supply) by forcing seller to incur compliance costs
12. General results of product reg- -increased prices to buyers (consumer surplus decreases),
ulation -decreased prices to sellers (producer surplus decreases),
-reduced quantity bought and sold
13. Given an industry is produc- too few units, giving up some units that have more consumer
ing the socially efficient output value than productive costs.
level, a tax placed on the in-
dustry will result in inefficiency
because the market will pro-
duce
14. Given an industry is produc- too many units, units have more costs than value
ing the socially efficient out-
put level, a subsidy placed on
the industry will result in ineffi-
ciency because the market will
produce
15. Productive Regulation on Taxi restricted licenses created an artificial shortage in the taxi cab
Service market
16. Uber technology benefits to low price, simplified process, easy search and payment, re-
passengers liable access in more markets, upfront info, feedback rating
system
17.
, G202 Kreft Exam 1
Uber technology benefits to increase productivity, higher volume and less time flexibility,
drivers rating system, 80% of revenue, access to loans and tech
18. Uber competitive advantage -tech based reductions in search cost
-avoid regulatory compliance costs
-efficient scaling in two-sided market
-surge price
19. Uber legitimacy political legitimacy and cultural legitimacy (MADD)
20. Uber case update -lobbying costs and court cases costs
-20% of revenue is not enough to cover the fixed costs of tech
development, lobbying, and litigation (no profit)
21. Lobbying (rent seeking) devoting resources to influence public policy formation in
order to bring more income/support to your group
22. Function of lobbyists 1. Find political opportunities and threats
2. Inform politicians and influence public opinion
3. Form coalitions: identify groups with 'similar' interests (EX:
Uber and MADD)
23. Special interest effect (who Small group of people receive benefits at the expense of a
takes political action) large group
24. Types of Political Action (4) 1. Majoritarian
2. Client
3. Interest Group
4. Entrepreneurial
25. Majoritarian politics -widely dispersed costs and benefits
-both large groups=no action
-NO lobbying
-Ex: Social Security
1. Rules for obtaining the so- 1. produce and sell where consumer value is greater than
cially efficient level of produc- cost
tion (Qe), where marginal val- 2. avoid producing and selling where consumer value is less
ue equals marginal cost: than cost
2. consumer surplus difference between what customers are willing to pay (based
on value) and the price they have to pay
3. producer surplus the difference between the lowest price a firm would be
willing to accept for a good or service and the price it actually
receives
4. Below Qe (socially efficient giving up producing some units that are valued more than
output) their productive costs (net benefit given up by society, under-
production)
5. Above Qe producing in range when units are valued less than their
productive costs
(Net cost on society, overproduction)
6. Taxes imposed on sellers cause an inward shift of the supply curve ( decreased supply)
by increasing production costs
7. Pseller (after tax) = Pbuyer-tax amt
8. General results of a tax -gov revenue collected, increased price to buyers (consumer
surplus decreases) -decreased price to sellers (producer sur-
plus decreases)
-reduced quantity bought and sold
9. Subsidies given to sellers an outward shift of supply curve (underproduction so in-
cause creased supply) by decreasing production costs
, G202 Kreft Exam 1
10. General results of a subsidy -decreased price to buyers (consumer surplus increases),
-increased price to buyers (producer surplus increases), -in-
creased quantity bought and sold
11. Product Regulation on sellers an inward shift of supply curve (overproduction, so decreased
(acts like a tax) causes... supply) by forcing seller to incur compliance costs
12. General results of product reg- -increased prices to buyers (consumer surplus decreases),
ulation -decreased prices to sellers (producer surplus decreases),
-reduced quantity bought and sold
13. Given an industry is produc- too few units, giving up some units that have more consumer
ing the socially efficient output value than productive costs.
level, a tax placed on the in-
dustry will result in inefficiency
because the market will pro-
duce
14. Given an industry is produc- too many units, units have more costs than value
ing the socially efficient out-
put level, a subsidy placed on
the industry will result in ineffi-
ciency because the market will
produce
15. Productive Regulation on Taxi restricted licenses created an artificial shortage in the taxi cab
Service market
16. Uber technology benefits to low price, simplified process, easy search and payment, re-
passengers liable access in more markets, upfront info, feedback rating
system
17.
, G202 Kreft Exam 1
Uber technology benefits to increase productivity, higher volume and less time flexibility,
drivers rating system, 80% of revenue, access to loans and tech
18. Uber competitive advantage -tech based reductions in search cost
-avoid regulatory compliance costs
-efficient scaling in two-sided market
-surge price
19. Uber legitimacy political legitimacy and cultural legitimacy (MADD)
20. Uber case update -lobbying costs and court cases costs
-20% of revenue is not enough to cover the fixed costs of tech
development, lobbying, and litigation (no profit)
21. Lobbying (rent seeking) devoting resources to influence public policy formation in
order to bring more income/support to your group
22. Function of lobbyists 1. Find political opportunities and threats
2. Inform politicians and influence public opinion
3. Form coalitions: identify groups with 'similar' interests (EX:
Uber and MADD)
23. Special interest effect (who Small group of people receive benefits at the expense of a
takes political action) large group
24. Types of Political Action (4) 1. Majoritarian
2. Client
3. Interest Group
4. Entrepreneurial
25. Majoritarian politics -widely dispersed costs and benefits
-both large groups=no action
-NO lobbying
-Ex: Social Security
