Economics 1021A/B Study Guide - Final Guide: Opportunity Cost, Marginal Utility, Deadweight Loss

• School: Western University
• Department: Economics
• Course: Economics 1021A/B
• Professor: Brandon Malloy

Document Summary

Non- excludable: cannot prevent others from consuming it. Rival: one person"s consumption decreases amount available for others. Non-rival: one person"s consumption does not decrease amount available for others. Public goods create free-rider problem no one has the incentive to pay for a public good, but everyone still wants to be able to use it. In turn provides less than efficient quantity of the good. Gov"t provision can provide an efficient quantity of a public good. Principle of minimum differentiation: tendency for competitors to make themselves similar/identical in order to appeal to the majority of people (ex. Rationally ignorant: deciding not to acquire information; cost of acquisition > expected benefit. Then politicians can allow inefficient overprovision of a public good. Monopolistic competition: model of market structure in which many firms compete. Collusion is impossible, bc all firms have small market share. Selling costs are fixed (marketing expenses/advertising is fixed!!) Monopoly: no close substitutes for the product, faces barriers to entry.