Micro Chapter 10,11,13 vocab review

externity

A cost or benefit incurred by a third party who is not directly involved in an economic transaction. Externalities can lead to market failure when the full costs or benefits are not reflected in market prices.

corrective tax

A tax imposed on activities that generate negative externalities, aimed at reducing harmful effects and encouraging more efficient resource allocation.

excludability

the property of a good whereby a person can be prevented from using it.

rivarly

A situation in which one person's consumption of a good reduces its availability for others. Rivarly characterizes goods that are limited in supply, such as food or clothes.

private goods

are goods that are both excludable and rivalrous, meaning that individuals can be prevented from using them and one person's consumption reduces availability for others.

public goods

Goods that are non-excludable and non-rivalrous, meaning that one person's use does not reduce availability for others and people cannot be effectively excluded from using them.

common resourses

Natural resources that are available to all without exclusion, but are subject to overuse and depletion.

benifits principles

Individuals should pay for services based on the benefits they receive. This principle allocates costs according to the advantage received from public services.

ability to pay pruncibles

A concept in taxation where individuals contribute based on their financial capacity, ensuring those with greater ability contribute more towards public expenditures.

horizontal equality

A principle in taxation that suggests individuals with similar abilities to pay should contribute equally, ensuring fairness in the tax system.

progressive tax

A tax system in which the tax rate increases as the taxable amount increases, placing a higher burden on those with greater income or wealth.

proportonail tax

A tax system where the tax rate remains constant regardless of income level, meaning everyone pays the same percentage of their income.