Public Policy and Economic Systems

These flashcards cover key vocabulary and concepts related to public policy and economic systems based on lecture notes.

Public Official

A person with authority conferred by the state, such as someone paid by taxpayers or someone in a government agency.

Public Policy

Actions taken by public officials that impact society.

Laissez-faire economic system

A policy of minimal government interference in economic affairs, applicable to individuals and society.

Socialism

An economic system involving high central government control, often resulting in mass inefficiency and potential failure.

Capitalism

A system where people control the market and prices with minimal government intervention.

Market

A venue where two or more parties engage in economic transactions involving goods and services.

GDP per capita

A measure used to compare economic growth between capitalist and socialist countries.

Utility

A term in economics describing the satisfaction or well-being individuals achieve while trying to maximize their welfare.

Preference

The state of wanting one thing more or less than another, which can vary between individuals and cultures.

Willingness to pay

The two conditions required: ability and willingness to pay for goods or services.

Net Benefit

An overall positive outcome for society, though often more an illusory idea than one that can be concretely calculated.

Marginal tax rate

The percentage of tax paid on each additional dollar of income within a specific tax bracket.

Prisoners Dilemma

A situation where self-interest leads to irrational outcomes, demonstrating the need for cooperation among individuals.

Commons

Shared spaces or resources among community members, where unequal use can create problems.

Free-rider

Individuals who benefit from the actions of others without contributing anything of their own.

Creative Destruction

The process wherein market innovation leads to significant change, benefiting some while harming others.

Opportunity cost

The cost associated with not choosing the next best alternative when making a decision.

Market Failure

Occurs when market outcomes do not maximize wealth, leading to issues such as monopolies and externalities.

Positive externality

A benefit that occurs from the consumption of a good that provides social benefits greater than individual benefits.

Negative externality

A cost that arises from production which affects third parties or society overall.

Private vs social values

Private values focus more on producers' interests, while social values encompass the broader perspective of society.