Chapter 14 - Public goods & tax policy

Rent

________- seeking: socially unproductive efforts of people or firms to win a prize.

Pure

________ public good: good /service that, to a high degree, is both non- rival and non- excludable.

Optimal production

________ of a public good occurs at the quantity for which the demand curve intersects the marginal cost curve for the public good.

profit companies

Private for- ________ also can become providers when new technologies such as pay- per- view television convert public goods into collective goods.

Government

________ creates economic surplus not only by providing public goods but also by regulating activities that generate externalities and by defining and enforcing property rights.

Pure commons

________ good: one for which non- payers can not easily be excluded and for which each unit consumed by one person means one less unit available for others.

Public good

good/service that, to at least some degree, is both non-rival and non-excludable

Non-rival good

good whose consumption by one person does not diminish its availability for others

Non-excludable good

good that is difficult, or costly, to exclude non-payers from consuming

Pure public good

good/service that, to a high degree, is both non-rival and non-excludable

Collective good

good/service that, to at least some degree, is non-rival but excludable

Pure private good

one for which non-payers can easily be excluded and for which each unit consumed by one person means one less unit available for others

Pure commons good

one for which non-payers cannot easily be excluded and for which each unit consumed by one person means one less unit available for others

Head tax

tax that collects the same amount from every taxpayer

Regressive tax

tax under which the proportion of income paid in taxes declines as income rises

Proportional income tax

one under which all taxpayers pay the same proportion of their incomes in taxes

Progressive tax

one in which the proportion of income paid in taxes rises as income rises

Pork barrel spending

public expenditure that is larger than the total benefit it creates but that is favored by a legislator because his or her constituents benefit from the expenditure by more than their share of the resulting extra taxes

Logrolling

practice whereby legislators support one another's legislative proposals

Rent-seeking

socially unproductive efforts of people or firms to win a prize

Crowding out

government borrowing that leads to higher interest rates, causing private firms to cancel planned investment projects (i.e., the tendency of increased government deficits to reduce investment spending)

Public good

Good/service that, to at least some degree, is both non-rival and non-excludable

Non-rival good

Good whose consumption by one person does not diminish its availability for others

Non-excludable good

Good that is difficult, or costly, to exclude non-payers from consuming

Pure public good

Good/service that, to a high degree, is both non-rival and non-excludable

Collective good

Good/service that, to at least some degree, is non-rival but excludable

Pure private good

One for which non-payers can easily be excluded and for which each unit consumed by one person means one less unit available for others

Pure commons good

One for which non-payers cannot easily be excluded and for which each unit consumed by one person means one less unit available for others

Head tax

Tax that collects the same amount from every taxpayer

Regressive tax

Tax under which the proportion of income paid in taxes declines as income rises

Proportional income tax

One under which all taxpayers pay the same proportion of their incomes in taxes

Progressive tax

One in which the proportion of income paid in taxes rises as income rises

Pork barrel spending

Public expenditure that is larger than the total benefit it creates but that is favored by a legislator because his or her constituents benefit from the expenditure by more than their share of the resulting extra taxes

Logrolling

Practice whereby legislators support one another's legislative proposals

Rent-seeking

Socially unproductive efforts of people or firms to win a prize

Crowding out

Government borrowing that leads to higher interest rates, causing private firms to cancel planned investment projects (i.e., the tendency of increased government deficits to reduce investment spending)