Chapter 13 Flashcards
External benefits/ positive externalities
Beneficial spillovers to a third party or parties, who did not purchase the good/service that provided the externalities
Free riders
Those who want others to pay for the public good and then plan to use the good for themselves; If many people act as free riders public good may never be provided
Intellectual property
The body of law , including patents , trademarks , copyright , and trade secret law that protect the rights of inventors to produce or sell their inventions
Nonexcludable
When it is costly or impossible to exclude someone from using the good, and thus hard to charge for it
Nonrivalrous
Even when one person uses the good others can also use it
Positive externalities
Beneficial spill over to a third party or parties
Private benefits
The benefits a person who consumes a good or service receives, or a new product’s benefits or processes that a company invents that the company captures
Private rates of return
When the estimated rates of return , go , primarily to an individual (example:interest on a savings account)
Public good
Good that is nonexcludable and non-rival. And thus it’s difficult for market producers to sell to individual consumers
Social benefits
Sum of private benefits and external benefits
Social rate of return
When the estimated rates of return go primarily to society (example: Providing free education)
