Definitions
Coase Theorem
demand curve
efficiency standard
equilibrium
externality
free rider
individual vs collective rationality
marginal benefit
marginal cost
market welfare hypothesis
market
net benefit
nonexclusion
nonrivalry
optimality (in economics)
positional good
prisoner's dilemma
private vs social cost
private vs social benefit
public good
quantity supplied
quantity demanded
safety standard
supply curve
transaction costs
utility
willingness to accept
willingness to pay

Questions

1. What does the evidence say about the relationship between income and well-being (happiness)? What are some of the potential reasons for this?

2. What is held constant and what is allowed to vary in the construction of the supply curve? The demand curve?

3. What are the two tests of a market equilibrium?

4. What is the relationship between market equilibrium and economic efficiency?

5. What assumptions are required if the market welfare hypothesis is to apply to a specific situation?

6. What was Coase's explanation for why there are externalities?

7. Are all public goods provided publicly? Are all publicly-provided goods public goods? Give examples.

8. How do economists measure the marginal benefit to society of goods and services?

9. What two forms do all social costs take? (That is, all social costs are either X or Y.) Explain.

10. What two problems contradict the Coase Theorem?

11. Why might the precautionary principle be at odds with the efficiency standard in economics?