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22 Cards in this Set
- Front
- Back
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market failure
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a situation in which an unrestrained market economy leads to too few or too many resources going to a specific economic activity
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externality
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a consequence of an exonomic activity that spills over to affect third parties (pollution)
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third parties
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parties who are not direcrtly involved in a given activity or transaction
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effluent fee
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a charge to a polluter that gives the right to discharge into the air or water a certain amount of pollution (pollution tax)
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property rights
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the rights of an owner to use and to exchange property
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antitrust legislation
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laws that restrict the formation of monopolies and regulate certain anticompetitive business practices
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monopoly
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a firm that has control over the price of a good.
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private goods
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goods that can be consumed by only one individual at a time
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rival consumption
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the recognition that individuals are rivals in consuming private goods
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public goods
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goods for whic the principle of rival consumption does not apply.
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exclusion principle
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the principle that no one can be excluded from the benefits of a public good, even if that person has not paid for it
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free-rider problem
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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
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merit good
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a good that has been deemed socially desireably through the political process. (museums)
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demerit good
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a good that has been deemed socially undesireable through the political system (drugs)
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transfer payments
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money payments made by governments to individuals for which in return no services or goods are rendered (wellfare)
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transfers in kind
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payments that are in the form of actual goods or services. (foodstamps)
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marginal tax rate
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the change in the tax payment divided by the change in income. applied to the highest tax bracket
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tax braket
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a specified interval of income to which a specific and unique marginal tax rate is applied
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average tac rate
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the total tax payment divided by total income.
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proportional taxation
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same proportions regardless of income
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progressive taxation
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a tax system in which, as income incresases, higher precentage is taxed
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regressive taxation
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a tax system in which as more dollars are earned, percentage tax paid on them falls
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