Principles of Economics

Externalities

When one pays the cost or receives the benefits, of a production process with which they nothing to do.

Welfare Economics

The study of how the allocation of resources affects economic well-being

Educational Externality

The more informed voter, less crime, more likely to produce, invent technology that makes everyone better off.

How can government correct externalities and control make the externality 

Corrective taxes and subsides, traceable pollution permits.

Characteristics of public goods

Exchangeable, raking in consumption

private goods

are both executable and rival in consumption

public goods

are neither executable nor rival in consumption

common resourcea

not excludable but rival in consumption

Club goods

exchangable, but not rival in consumption

Free rider problem

A person who receives the benefit of a good but avoids paying it.

Common property regime

Anyone may use or consume price

Benefits principle

people should be taxed based on the government services they received. (ability to pay)

Horizontal

similar pay the same amount

vertical 

great ability to pay taxes should pay more

The law of diminishing marginal product

A situation in which adding more and more of a variable input to a fixed plant results in a smaller and smaller amount of traditional output produced.