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Economics Today (the Macro View): Chapter 5: Public Spending/Choice
Terms in this set (28)
Laws that restrict the formation of monopolies and regulate certain anticompetitive business practices.
Collective Decisions Making
How voters, politicians, and other interested parties act and how these actions influence nonmarket decisions
The difference between the total amount that consumers would have been willing to pay for an item and the total amount that they actually pay
A problem that arises when indiv. presume that others will pay for public goods so that, indiv., they can escape paying for their portion w/o causing a reduction in production.
Suppose Canada spends less per capita on national defense than many other countries of similar size and income. A reasonable economic explanation would be that Canada is able to free-ride on the defense spending of the US.
A charge to a polluter that gives the right to discharge into the air or water a certain amt of pollution; also pollution tax.
A consequence of an economic activity that spills over to affect third parties. Ex. pollution.
Gains from trade
The sum of consumer surplus and producer surplus.
A good that has been deemed socially undesirable through the political process. Ex. heroin.
Government or Political Goods
Goods and services provided by the public sector, they can be either private or public goods
Government sponsored good.
A good that has been deemed socially desirable through the political process. Ex. museum.
The system of rewards and punishments individuals face with resoect to their own actions
A collective decision-makng system in which group decisions are made on the basis of more than 50 percent of the vote. In other words, whatever more than half of the electorate votes for, the entire electorate has to accept
A situation in which the market economy leads to too few or too many resources going to a specific economic activity.
A good that has been deemed socially desirable through the political process
A firm that can determine the market price of a good. because it has no competition.
Principle of rival consumption
The recognition at indiv. are rivals in consuming private goods because one person's consumption reduces the amount available for others to consume.
Goods that can be consumed by only one individual at a time. Private goods re subject to the principle if rival consumption.
The difference between the total amount that producers actually receive for an item and the total amount that they would have been willing to accept for supplying that item
The rights of an owner to use and exchange property
A decision-making system in which actions are based on the proportion of the "votes" cast and are in proportion to them. In a market system, if 10 percent of the "dollar votes" are cast for blue cars, 10 percent of automobile output would be blue cars
Goods for which the Princ. of rival goods does not apply & for which exclusion of nonpaying customers is too costly. Can be consumed by many indiv simultaneously at no additl. cost& w/no reduct in quality/quantity. No one who fails to pay can b denied he benefit of the good.
Theory Of Public Choice
The study of collective decision making
Parties who are not actually involved in a given activity or transaction
Money paymts made by govt to indiv. for which no service/goods are rendered in return. Ex. Social Sec., unemployment ins bennies.
Transfers in kind
Payments in the form of actual goods/services. Ex. food stamps, subsidized public housing.
What is not a political function of the government that leads to involvement in the economy
What is not an economic function of government?
Which one of the following is a primary difference between a public good and a private good?
Private goods are subject to the principle of rival consumption while public goods are not.