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22 Cards in this Set

  • Front
  • Back
market failure
a situation in which an unrestrained market economy leads to too few or too many resources going to a specific economic activity
a consequence of an exonomic activity that spills over to affect third parties (pollution)
third parties
parties who are not direcrtly involved in a given activity or transaction
effluent fee
a charge to a polluter that gives the right to discharge into the air or water a certain amount of pollution (pollution tax)
property rights
the rights of an owner to use and to exchange property
antitrust legislation
laws that restrict the formation of monopolies and regulate certain anticompetitive business practices
a firm that has control over the price of a good.
private goods
goods that can be consumed by only one individual at a time
rival consumption
the recognition that individuals are rivals in consuming private goods
public goods
goods for whic the principle of rival consumption does not apply.
exclusion principle
the principle that no one can be excluded from the benefits of a public good, even if that person has not paid for it
free-rider problem
a problem that arises when individuals presume that others will pay for public goods so that, individually they can escape from paying for their portion without causing a reduction in production
merit good
a good that has been deemed socially desireably through the political process. (museums)
demerit good
a good that has been deemed socially undesireable through the political system (drugs)
transfer payments
money payments made by governments to individuals for which in return no services or goods are rendered (wellfare)
transfers in kind
payments that are in the form of actual goods or services. (foodstamps)
marginal tax rate
the change in the tax payment divided by the change in income. applied to the highest tax bracket
tax braket
a specified interval of income to which a specific and unique marginal tax rate is applied
average tac rate
the total tax payment divided by total income.
proportional taxation
same proportions regardless of income
progressive taxation
a tax system in which, as income incresases, higher precentage is taxed
regressive taxation
a tax system in which as more dollars are earned, percentage tax paid on them falls