Efforts to address inefficiencies in the provision of public goods often involve __________ intervention, such as direct provision by the public sector, subsidies to encourage private provision, or regulatory mechanisms to internalize externalities.

Government subsidies to domestic industries can artificially lower production costs and enable firms to sell goods at prices below their true market value

This is a factor that market participants do not have access to all relevant information about an asset or investment opportunity

Efforts to address inefficiencies in international trade often involve trade agreements, negotiations, and multilateral organizations such as the World Trade Organization (WTO)

This factor of ineffiency occur when the actions of one party affect the well-being of others but are not reflected in market prices.

The term _____ means few sellers. It can be a number as small as 2 or as large as 10-15 firms. Its important feature is that individual firm can affect the market price

Type of Production providing intangible services.

are graphical representations that show all the combinations of inputs (usually labor and capital) that can be purchased for a given total cost. The ______  line helps in determining the most cost-effective combination of inputs for a given level of production.

It is graphical representations used in production theory to show all the possible combinations of inputs (usually labor and capital) that result in the same level of output.

Isoquants are similar to indifference curves in consumer theory but are applied to the production side of the economy.

In the presence of _______ externalities, markets may underinvest in goods or services that generate external benefits, leading to inefficiency because the full social value of these activities is not realized.

________ intended to shield domestic industries from foreign competition, often lead to higher prices for consumers and less efficient production.

Isoquants typically slope downward from left to right, indicating the inverse relationship between inputs. This reflects the idea that as one input increases, it can compensate for a decrease in the other input to maintain the same level of output.

It is a cost involved in producing more units, which in this case is the cost of employing workers.

 It is the cost of producing an extra unit of output.

Market participants can employ strategies to mitigate the impact of inefficiencies, such as conducting thorough research, diversifying portfolios, or using advanced analytical techniques.

The equation of an isocost line is given by •C=w⋅L+r⋅K, •where C is the total cost, •w is the wage rate, •L is the quantity of labor, •r is the rental rate of capital, and •K is the quantity of capital.

Technological advancements and innovations can significantly impact the production process, leading to increased efficiency, reduced costs, and the development of new products.

The government may directly provide public goods or fund their provision to ensure their availability and distribution, thus mitigating negative externalities or promoting positive ones.

The additional cost incurred by producing one more unit of a good or service. It is calculated by the change in total cost divided by the change in quantity.

___________ may impose costs on society that are not borne by the polluting firms, leading to suboptimal resource allocation.

If market fails to incorporate the external costs into the prices of goods and services, leading to overproduction and consumption of goods that will generate _______ externalities.

Tradable permit systems set a limit on the total level of pollution allowed and allocate permits to firms. Firms that can reduce their emissions at a lower cost can sell their permits to those with higher costs, incentivizing pollution reduction at the lowest overall cost.

Taxes can be imposed on activities that generate negative externalities (like carbon emissions), while subsidies can be provided for activities that generate positive externalities (like education or renewable energy).

Total variable cost (VC) + total fixed cost (FC)

When multiple isocost lines are plotted on a graph, it forms an ________. It helps in visualizing the cost implications of different input combinations

Type of Production where Simultaneous production of multiple goods from the same inputs

Polution imposes costs on society that are not borne by the polluting firm, leading to inefficient resource allocation. What type of factor in ineffiency is this?

In Production, what is input?

This is a common example of market inefficiency, where asset prices rise far above their intrinsic values due to investor optimism and herd behavior. These bubbles eventually burst, leading to sharp price declines and economic downturns.

determined by the ratio of input prices (w/r). It represents the trade-off between the cost of labor and the cost of capital.

Type of Externalities when the actions of one party impose costs on others who are not involved in the transaction, _______ externalities occur.

Market inefficiencies can arise due to _________, which occur when the actions of one party affect the welfare of others without being reflected in market prices.

Understanding the relationship between isoquants and isocosts is fundamental to the theory of production and helps businesses make decisions regarding input combinations, cost minimization, and efficiency in production processes.

It refers to situations where assets are not priced correctly according to their fundamental values or where resources are not allocated optimally

the rate at which one input can be reduced while the other input is increased, maintaining the same level of output. It is calculated as the slope of the isoquant.

Isoquants short for ______ ?

A Factor of Ineffiency where government regulations can distort market prices and inhibit efficiency.

It represents a higher level of output. Therefore, moving to a higher isoquant indicates an increase in production.

Common pool resources, a type of public good, are susceptible to overuse or depletion when individuals exploit them without considering the long-term consequences. This leads to inefficiency as the resource becomes depleted, reducing its availability for future generations. What type of factor in ineffieciency in the provision of public goods is this?

Isoquants are usually convex to the origin, which means that as more of one input is used, the marginal rate of technical substitution (MRTS) between the inputs decreases.

The perfect competitor faces completely horizontal demand curve.

Total cost / quantity

The sum of fixed and variable costs. It represents the overall cost of producing a specific quantity of goods or services.

Type of externalities that occur when the actions of one party confer benefits on others who are not involved in the transaction.

it occurs when a large number of sellers produce differentiated products.There are many sellers but none of whom have a large share of the market.

a single seller with complete control over an industry. It is the only firm producing in its industry, and there is no industry producing a close substitute

Public goods often generate positive externalities, benefits that accrue to society as a whole but are not reflected in market prices. If these external benefits are not taken into account, the private sector may underinvest in the provision of public goods, leading to inefficiencies in resource allocation.

It refers to the process of creating goods and services to satisfy human wants and needs.

This distorts international trade by giving subsidized industries a competitive advantage over foreign producers, leading to inefficient resource allocation.

The provision of certain public goods, such as national defense or environmental protection, may require coordination among multiple actors, including governments, international organizations, and private entities. In the absence of effective coordination mechanisms, there may be inefficiencies in the allocation and management of resources.

Externalities, whether positive or negative, can lead to inefficiencies in resource allocation within markets.

Understanding production costs is crucial for businesses to determine pricing strategies, assess profitability, and optimize production processes for efficiency and competitiveness in the market.

Based of Currency Manipulation, _________ make a country's exports cheaper and imports more expensive, which can lead to trade imbalances and inefficiencies.

occur when the average cost of production decreases as the scale of production increases. This is often associated with increased efficiency in large-scale operations.

Total variable cost / quantity produced

Connecting the optimal points on the isocost lines for various levels of output creates the expansion path. The _______ illustrates how the optimal input combination changes as production increases.

Isocost lines short for ______ ?

The per-unit cost of production, calculated by dividing total cost by the quantity of output. It includes average fixed cost and average variable cost.

Achieving perfect efficiency in markets is not challenging due to the complexity of economic interactions and the limitations of human behavior.

Initiatives to improve infrastructure, streamline customs procedures, and enhance regulatory coherence will not help reduce transaction costs and facilitate smoother international trade flows.

Innovative financing mechanisms, public-private partnerships, and community-based initiatives can help improve the efficiency and sustainability of public goods provision.

Inefficient ___________ systems can increase the cost and time required to move goods across borders. Delays at ports, inadequate infrastructure, and bureaucratic procedures can all contribute to inefficiencies in international trade.

A Imperfecly competitive firm sells homogenous product.

________ is a world of price-takers.is a world of price-takers

In production, what is output?

A factor of inefficiency where high transaction costs, such as brokerage fees or taxes, can impede the efficient flow of capital in markets, leading to suboptimal allocation of resources.

_______ can be provided for activities that generate positive externalities (like education or renewable energy).

This concept is similar to the law of diminishing marginal returns. It suggests that as one input is increased while the other is held constant, there is a diminishing ability for the inputs  mto substitute each other at a constant level of output.

The value of the best alternative forgone when a decision is made. In production, it can be the potential revenue or benefits lost by choosing one production option over another.

_____ can be imposed on activities that generate negative externalities (like carbon emissions)

Graphical representations of the relationship between production costs and the level of output. Common ______ include the average total cost curve, marginal cost curve, and average variable cost curve.

Tariffs, quotas, and other trade barriers imposed by governments can distort trade flows and impede the efficient allocation of resources.

Costs that do not vary with the level of production. These costs exist even if production is zero. Examples include rent, insurance, and salaries of permanent staff.

Group of firm selling a same kind of product Producing the same kind of product in the economy

Public goods may be provided inefficiently due to ___________ also known as inadequate funding. Government agencies responsible for providing public goods may face budget constraints, bureaucratic inefficiencies, or political pressures that affect their ability to allocate resources optimally.

Price controls or restrictions on trade can create artificial shortages or surpluses. This is a example of what factor of ineffiency?

Weak enforcement of ___________ in some countries can discourage innovation and technology transfer, leading to inefficient outcomes in international trade.

The firm is so small relative to its market that it cannot affect the market price.The firm is so small relative to its market that it can affect the market price.

Based on Intellectual property theft and piracy can undermine the incentives for firms to invest in research and development.

Human psychology can lead to irrational decision-making, such as overreacting to short-term market movements or being influenced by cognitive biases like herd behavior or confirmation bias.

prevails in an industry whenever an individual sellers have some measure of control over the price of their output.prevails in an industry whenever an individual sellers have some measure of control over the price of their output.

It refers to the expenses incurred by a firm or producer in the process of manufacturing goods or providing services. Understanding production costs is essential for businesses to make informed decisions about pricing, production levels, and profitability.

The relationship between inputs and outputs in the production process is often expressed as a __________. It shows how much output can be produced with a given set of inputs.

The point where an isocost line is tangent to an isoquant represents the ________ of inputs for a given level of output. At this point, the marginal rate of technical substitution (MRTS) equals the input price ratio.

Efforts to address market inefficiency often involve __________

Individuals may benefit from public goods without paying for them (the free-rider problem), there is a tendency for underprovision by the private sector. This results in inefficiency because the optimal level of provision may not be met.

This can create barriers to trade and increase transaction costs for businesses.

A factor of ineffiency where Monopolies or oligopolies may have significant market power, allowing them to manipulate prices or restrict competition, resulting in inefficient outcomes.

Public goods are characterized by non-excludability and non-rivalry, meaning that once provided, individuals cannot be excluded from using them, and one person's consumption does not diminish the amount available to others.

Costs that vary in direct proportion to the level of production. Examples include raw materials, direct labor, and utilities.

The _______ represents the maximum potential output combinations of two goods or services that an economy can achieve, given its level of technology and inputs.

When countries artificially manipulate their currency exchange rates to gain a competitive advantage in international trade, it can distort trade flows and lead to misallocation of resources

Costs that have already been incurred and cannot be recovered. _____ are irrelevant for future decision-making.

Regulations can be implemented to require firms to adopt cleaner technologies or practices, reducing negative externalities such as pollution.

Type of Production where Manufacturing physical products.

__________ aim to reduce tariffs, eliminate trade barriers, and establish common rules and standards to promote a more efficient and predictable trading environment.

It refers to costs independent of output, e.g. paying for factory

This lack of information can lead to ________ as investors make decisions based on incomplete or inaccurate data.

refers to how different industries are classified and differentiated based on their degree and nature of competition for goods and services. It is based on the characteristics that influence the behavior and outcomes of companies working in a specific market.