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Definition
| fall in total surplus that comes from a market distortion, such as a tax. |
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Term
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Definition
| tax revenue first increases, then decreases as the tax size gets larger. |
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Definition
| the price of a good that prevails in the world market for that good |
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Definition
| a tax on goods produced abroad and sold domestically |
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Term
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Definition
| the uncompensated impact of one person's actions on the well-being of a bystander |
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Term
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Definition
| if the impact of one person's actions on a bystander is adverse |
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Definition
| if the impact of one person's action on a bystander is beneficial |
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Term
| internalizing the externality |
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Definition
| altering incentives so that people take account of the external effects of their actions. |
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Term
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Definition
| if private parties bargain without cost over the allocation of resources, they can solve the problem of externalities on their own. |
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Term
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Definition
| the cost that parties incur in the process of agreeing to and following through on a bargain. |
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Definition
| a tax designed to induce private decision makers to take account of the social costs that arise from a negative externality |
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Term
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Definition
| the property of a good whereby a person can be prevented from using it. |
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Term
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Definition
| the property of a good whereby one person's use diminishes other people's use |
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Term
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Definition
goods that are excludable and rival in consumption
ex: ice cream cone |
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Term
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Definition
goods that are neither excludable nor rival in consumption
ex: tornado siren, national defense |
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Term
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Definition
goods that are rival in consumption but not excludable
ex: fish in the ocean, the environment |
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Term
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Definition
good is excludable but not rival in consumption.
ex: cable tv, fire protection |
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Term
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Definition
a person who receives the benefit of a good but avoids paying for it.
ex: firework show |
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Term
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Definition
| a study that compares the costs and benefits to society of providing a public good. |
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Term
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Definition
| a parable that illustrates why common resources get used more than is desirable from the standpoint of society as a whole. |
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Term
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Definition
| the extra taxes paid on an additional dollar of income |
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Term
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Definition
| a tax that is the same amount for every person. |
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Term
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Definition
| the idea that people should pay taxes based on the benefits they receive from government services. |
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Term
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Definition
| the idea that taxes should be levied on a person according to how well that person can shoulder the burden. |
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Term
| vertical equity and horizontal equity |
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Definition
the idea that taxpayers with a greater ability to pay taxes should pay larger amounts.
idea that taxpayers with a similiar abilities to pay taxes should pay the same amount |
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Term
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Definition
| tax where higher-income and low-income taxpayers pay the same fraction of income |
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Term
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Definition
| tax where high-income tax payers pay a smaller fraction of their income than do low-income taxpayers |
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Term
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Definition
| tax where high-income taxpayers pay a larger fraction of their income than do low-income taxpayers |
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Term
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Definition
| the study of who bears the burden of taxes |
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Term
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Definition
| the amount a firm receives for the sale of its output |
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Term
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Definition
| the market value of the inputs a firm uses in production |
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Term
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Definition
| total revenue minus total cost |
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Term
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Definition
| input costs that require an outlay of money by the firm |
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Term
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Definition
| input costs that do not require an outlay of money by the firm |
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Term
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Definition
| total revenue minus total cost, including both explicit and implicit costs |
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Term
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Definition
| total revenue minus total explicit cost. |
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Term
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Definition
| the relationship between quantity of inputs used to make a good and the quantity of outputs of that good |
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Term
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Definition
| the increase in output that arises from an additional unit of input |
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Term
| diminishing marginal product |
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Definition
| the property whereby the marginal product of an input declines as the quantity of the input increases. |
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Term
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Definition
| costs that do not vary with the quantity of output produced. |
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Term
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Definition
| costs that do vary with the quantity of output produced |
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Term
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Definition
| the increase in total cost that arises from an extra unit of production. |
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Term
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Definition
| the quantity of output that minimizes average total cost |
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Term
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Definition
| the property whereby long-run average total cost falls as the quantity of output increases |
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Term
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Definition
| LR ATC rises as quantites of output increase |
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Term
| constant returns to scale |
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Definition
| LR ATC stays the same as the Q of output changes |
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