Final exam Flashcards
Externality
a market exchange that affects a third party who is outside or “external” to the exchange; sometimes called a “spillover”
Free Rider
those who want others to pay for the public good and then plan to use the good themselves; if many people act as free riders, the public good may never be provided
Non-Excludable
when it is costly or impossible to exclude someone from using the good, and thus hard to charge for it
Non-Rival
even when one person uses the good, others can also use it
Bilateral Monopoly
a labor market with a monopsony on the demand side and a union on the supply side
Monopsony
a labor market where there is only one employer
Median Voter Theorem
theory that politicians will try to match policies to what pleases the median voter preferences
Poverty Trap
antipoverty programs set up so that government benefits decline substantially as people earn more income—as a result, working provides little financial gain
Adverse Selection
when groups with inherently higher risks than the average person seek out insurance, thus straining the insurance system
Moral Hazard
when people have insurance against a certain event, they are less likely to guard against that event occurring
Dumping
selling internationally traded goods below their cost of production
Club Good
Non-Rival; Excludable
Private Good
Rival, Excludable
Common Resource
Rival, Non-Excludable
Public Good
Non-Rival, Non-Excludable
