| A | B |
|---|
| Private Good | Goods that are both rival and excludable |
| Willingness to Pay | The maximum price a consumer is prepared to pay for a good. |
| Excludable | Describes a situation in which suppliers can prevent those who do not pay from consuming the good. |
| Nonexcludable | Describes a situation in which suppliers cannot prevent those who do not pay from consuming the good. |
| Rival in Consumption | A case in which one unit of a good cannot be consumed by more than one person at the same time. |
| Public Goods | Goods that are both nonrival and nonexcludable. |
| Free Rider Problem | The lack of private funding for a public good due to the presence of free riding individuals who will not contribute to provision of the good. |
| Marginal Tax Rate | The rate paid on the last dollar earned, calculated by taking the ratio of the change in taxes divided by the change in income. |
| Average Tax Rate | The proportion of total income paid to taxes. |
| Progressive Tax | A tax where the proportion of income paid in taxes rises as income rises. |
| Tax Bracket | A range of income on which a given marginal tax rate is applied. |
| Regressive Tax | A tax where the proportion of income paid in taxes decreases as income rises. |
| Proportional Tax | A tax where the proportion of income paid in taxes is constant no matter the level of income. |
| Income Distribution | The way in which total income is divided among the owners of the various factors of production. |
| Common Resource | nonexcludable and rival in consumption; you cannot stop others from consuming the good, and when they consume it, less of the good is available for you. |
| Vertical summation | The aggregate demand curve for a public good. |
| Flat Tax | is a tax system with a constant marginal rate, usually applied to individual or corporate income. |
| Negative Income Tax | money credited as allowances to a taxed income, and paid as a benefit when it exceeds debited tax. |
| Ability to Pay Principle | maintains that taxes should be levied according a taxpayer's ability to pay. |
| Benefits Received Principle | people should pay taxes based on the benefits they receive from the government. |
| Tax Incidence | The distribution of the tax burden |
| Deadweight Loss | the decrease in total surplus resulting from the market failure. |
| Human Capital | the improvement in labor created by the education and knowledge of members of the workforce. |
| Compensation Differential | wage differences across jobs that reflect the fact that some jobs are less pleasant or more dangerous than others. |
| Poverty Rate | the percentage of the population with incomes below the poverty threshold. |
| Poverty Threshold | the annual income below which a family is officially considered poor. |
| In Kind Transfers | a benefit given it the form of goods or services. |
| Laffer Curve | a supposed relationship between economic activity and the rate of taxation that suggests the existence of an optimum tax rate that maximizes tax revenue. |
| Lorenz Curve | Shows the percentage of all incomes received by the poorest members of the population, from the poorest 0% to the poorest 100%. |
| Gini Ratio | a number that summarizes a country's level of income inequality based on how unequally income is distributed. |
