Intervention Flashcards
Market failure
When the price mechanism leads to a misallocation of resources
Social science
The scientific study of societies and social interaction
Negative externalities
Costs which affect third parties outside the price mechanism
Price mechanism
The means by which decisions of consumers and businesses interact to determine the allocation of resources.
Negative consumption externalities
when the consumer is causing the negative externality
Corporation tax
Direct tax paid to the government by firms. It is a tax on profits made by firms
Direct tax
Tax paid directly to the government, cannot be passed on
Indirect tax
Tax paid when goods and services are purchased, passed on to the buyer
Minimum price
the lowest price suppliers of a good can legally sell for
