definitions Flashcards
excludable good
if people can be prevented from using a good
rivalry in consumption
If one person’s use of a unit of a good reduces another person’s ability to use it, the good is rival in consumption
private good
both excludable and rival in consumption
public good
neither excludable nor rival in consumption
common resources
rival in consumption but not excludable
club goods
excludable but not rival in consumption
free-rider problem
a person who receives the benefit of a good without paying for it
cost-benefit analysis
a study that compares the costs and benefits to society of providing a public good
Tragedy of Commons
a parable that illustrates why common resources are used more than is desirable from the standpoint of society as a whole; arises because of an externality
total revenue
the amount that the firm receives for the sale of its output
total cost
the amount that the firm pays to buy inputs
profit
total revenue - total cost
explicit costs
input costs that require an outlay of money by the firm
implicit costs
input costs that do not require an outlay of money by the firm
production function
the relationship between the quantity of inputs used to make a good and the quantity of output of that good
