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11 Cards in this Set
- Front
- Back
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Private good |
- a good that, once consumed by one person, cannot be consumed by someone else - excludable - rivalrous |
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Public good |
- the consumption of a good does not affect the amount of the good available for others to consume - non-excludable - non-rivalrous |
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Private good example |
- food - clothing - ticket to a show |
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Public good example |
- lamppost - flood defences - national defences |
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Free-rider problem |
when an individual cannot be excluded from consuming a good and so has no incentive to pay for its provision |
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Asymmetric information |
a situation in which some participants in a market have better information about market conditions than others |
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Symmetric information |
where buyers and sellers have access to the same information |
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Adverse situation |
a situation in which a person at risk is more likely to take out insurance |
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Moral hazard |
a situation in which a person who has taken out insurance is prone to taking more risk |
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Merit good |
a good with underestimated benefits and overestimated costs |
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Demerit goods |
a good with overestimated benefits and underestimated costs |
