AP®︎ Microeconomics: Topic 6.4 Flashcards

Master key terms and definitions for Topic 6.4 of AP Microeconomics – The Effects of Government Intervention in Different Market Structures to help you prep for quizzes and the AP exam.

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Term

Tax Incidence

Definition

The division of a tax burden between buyers and sellers based on relative elasticities.

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Tax Incidence
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The division of a tax burden between buyers and sellers based on relative elasticities.

POL-4.APOL-4.A.1
Effects Of Per-Unit Taxes And Subsidies On Market Outcomes
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They change consumer price, producer price, quantity, surpluses, deadweight loss, and government revenue or cost.

POL-4.APOL-4.A.1
Binding Price Ceiling And Price Floor In Different Market Structures
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A binding ceiling sets price below equilibrium; a binding floor sets price above equilibrium, with effects varying by market structure.

POL-4.APOL-4.A.3
Natural Monopoly And Lump-Sum Subsidy
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A single-firm industry with falling average costs needs a fixed subsidy to produce where price equals marginal cost.

POL-4.APOL-4.A.6
Antitrust Policy
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Government action that promotes competition by preventing or breaking up anticompetitive market power.

POL-4.APOL-4.A.7
Government Intervention In Imperfect Markets
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Policies can increase efficiency when they correct the incentives causing market failure.

POL-4.APOL-4.A.4
Per-Unit Vs. Lump-Sum Taxes And Subsidies
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Per-unit policies change marginal cost, while lump-sum policies change fixed costs only.

POL-4.APOL-4.A.2
Effects Of Per-Unit Taxes And Subsidies On Firm Cost Curves
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Per-unit taxes shift MC, AVC, and ATC up; per-unit subsidies shift them down.

POL-4.APOL-4.A.1
Effects Of Lump-Sum Taxes And Subsidies On Firm Cost Curves
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Lump-sum taxes raise ATC and AFC, while lump-sum subsidies lower them.

POL-4.APOL-4.A.2
Monopoly Price Regulation
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Regulation can set price at P = MC or ATC to reduce monopoly inefficiency.

POL-4.APOL-4.A.5