Y12 Microeconomics

5. A grant given by the government to producers to lower their production costs and encourage consumption of merit goods.
6. A good that is underconsumed in a free market because consumers underestimate its benefits.
7. A good that is overprovided because consumers underestimate its private costs or ignore its negative externalities.
12. The ______ of labour; specializing workers into specific tasks to increase productivity.
13. A spillover effect on a third party outside of a market transaction.
14. The efficiency achieved when price equals marginal cost, maximizing social welfare.
16. A type of good characterized by non-excludability and non-rivalry, leading to the free-rider problem.
18. Domestically produced goods and services sold to other countries; an injection into the circular flow.
19. A good in joint demand; a rise in the price of one decreases the demand for the other.
20. The cost of the next best alternative foregone when making a choice.

1. A good in competing demand; a rise in the price of one increases the demand for the other.
2. The surplus defined as the difference between what a buyer is willing to pay and what they actually pay.
3. The efficiency achieved when a firm operates at the minimum point of its average cost curve.
4. The classical assumption that economic agents always act to maximize their own utility or profit.
8. The market state where planned supply exactly equals planned demand.
9. The surplus defined as the difference between the price a supplier accepts and the market price.
10. The fiscal situation when annual government spending is greater than its tax revenues.
11. The type of policy that uses government spending and taxation to manipulate aggregate demand.
15. A type of information gap where one party in a transaction has more info than the other.
17. Describing demand where the percentage change in price leads to a smaller percentage change in quantity.