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DefinitionsforFinal - Definitions for Final Economics...

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Definitions for Final Economics 304K:Principles of Microeconomics Prof. Meg Ledyard Please use these definitions word for word. You may paraphrase, but do so at your own risk. Sometimes what you think means the same does not. There will be no separate definitions section, however, you may be asked to define a word as a part of a longer problem. Natural Monopoly— An industry with decreasing average total cost. Arises because of high fixed costs, and low marginal costs. MC regulation – Requiring the natural monopoly to charge a price equal to where MC=D. ATC regulation – Requiring the natural monopoly to charge a price equal to where ATC= D. Export – good produced domestically and sold abroad. Import – good produced abroad and sold domestically. World Price – The price of a good that prevails in the world market for that good. Tariff – A tax on goods produced abroad and sold domestically. Externality – The uncompensated impact of one person’s actions on the well-being of a bystander.
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