Pol 102 Quiz 3

Pol 102 Quiz 3

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Study of the interaction of states and markets Political Economy
What are the 2 major types of conflict? Freedom vs Equality and Self Interest vs Common Interest
Type of institution, ownership of goods Property
What are the 4 property rights? 1. Right to use the good2. Right to consume/earn income from the good 3. Right to transfer the good to others4. Right to enforce property rights
Property can be what 4 things? Tangible, Incorporable, Private, or Public
Type of institution, medium through which buyers and sellers exchange goods and services Markets
What is the roll of the state concerning markets? Set prices
What is an alternative to markets? Central Planning
When government agents determine how much of a good is produced and set its price Central Planning
Why is central planning inefficient? It's impossible to pin down a good price
Goods and services routinely traded in a manner contrary to the laws or regulations of the state Black Markets
When the allocation of goods and services is not efficient, what happens? Market Failure
Maximize ones expected return or utility (total expected benefit is less than total expected costs) Rationality
When there is conflict between individual interest and group interest Collective Action Problem
There is more of an incentive to pursue ? goals than ? goals Individual, Group
Type of game played by police where 2 suspected criminals are separated and must either sell each other out or cooperate by remaining silent Prisoner's Dilemma
How do we know which goods present Collective Action Problems? Rivalry and Excludability
A good whose consumption by one consumer prevents consumption by other consumers Rivalry
What is an example of a rivalry? Food, drink
What is an example of a non rivalry? Clean air, the sun
Whether or not a person can be excluded from using a resource Excludability
What are the 4 types of goods? Private goods, Club goods, Common Resources, Public Goods
Type of good that is non excludable and non rivalrous. Usually paid for by taxes Public Good
Cost or benefit that affects a party who did not choose to incur that cost or benefit Externality
An economic decision that imposes a benefit on an unrelated 3rd party Positive Externality
What is an example of a positive externality? Education, Immunization
Form of financial support extended to an economic actor generally with the aim of promoting certain behavior Subsidy
Type of good that is rivalrous but is non excludable. Common Good
What is an example of a common good? Fish docks, fresh water, forrest
Situation where rational individuals act contrary to the best interests of the whole group causing the depletion of some common resource Tragedy of the Commons
Amount of resource availble Stock Variable
Amount of resource which can be extracted without depleting the stock variable Flow variable
Transforms public goods into a private good Privatization
Central authority that regulate access to and maintenance of the resource, and prescribe punishment for violators The Leviathan
A cost that affects an actor who did not choose to incur that cost Negative Externality
If the producer/consumer of a negative externality does not bear the full cost of the good, it results in ? Over production of the good
To solve overproduction, you have to ? the cost Internalize
Type of tax intended to correct an inefficient market outcome by being set equal to the social cost of the negative externality Pigouvian Tax
Rules are orders that set the boundaries of a given procedure Regulation

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