1.6.8: Key Terms

Principles of Microeconomics 3e · LibreTexts

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    From LibreTexts, under CC BY 4.0, as the source states it; its equations are written in TeX, which the PDF shows typeset. This page at LibreTexts.

    Example and Directions
    Words (or words that have the same definition)The definition is case sensitive(Optional) Image to display with the definition [Not displayed in Glossary, only in pop-up on pages](Optional) Caption for Image(Optional) External or Internal Link(Optional) Source for Definition
    (Eg. "Genetic, Hereditary, DNA ...")(Eg. "Relating to genes or heredity")IllustrationThe infamous double helix https://bio.libretexts.org/CC-BY-SA; Delmar Larsen
    Glossary Entries
    Word(s)DefinitionImageCaptionLinkSource
    additional external costadditional costs incurred by third parties outside the production process when a unit of output is produced    
    biodiversitythe full spectrum of animal and plant genetic material    
    command-and-control regulationlaws that specify allowable quantities of pollution and that also may detail which pollution-control technologies one must use    
    externalitya market exchange that affects a third party who is outside or “external” to the exchange; sometimes called a “spillover”    
    international externalitiesexternalities that cross national borders and that a single nation acting alone cannot resolve    
    market failureWhen the market on its own does not allocate resources efficiently in a way that balances social costs and benefits; externalities are one example of a market failure    
    marketable permit programa permit that allows a firm to emit a certain amount of pollution; firms with more permits than pollution can sell the remaining permits to other firms    
    negative externalitya situation where a third party, outside the transaction, suffers from a market transaction by others    
    pollution chargea tax imposed on the quantity of pollution that a firm emits; also called a pollution tax    
    positive externalitya situation where a third party, outside the transaction, benefits from a market transaction by others    
    property rightsthe legal rights of ownership on which others are not allowed to infringe without paying compensation    
    social costscosts that include both the private costs incurred by firms and also additional costs incurred by third parties outside the production process, like costs of pollution    
    spilloversee externality    

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