Economics - Chapter 3

positive externality

A beneficial side effect of an action that is felt by others.

public good

A good of which one person's consumption does not take away from another person's consumption.

private good

A good of which one person's consumption takes away from another person's consumption.

entrepreneur

A person who has a special talent for searching out and taking advantage of new business opportunities.

free rider

A person who receives the benefits of a good without paying for it.

excludable public good

A public good that individuals can be excluded (physically prohibited) from consuming.

nonexcludable public good

A public good that individuals cannot be excluded (physically prohibited) from consuming.

loss

The amount of money by which total cost exceeds total revenue.

profit

The amount of money left over after all the costs of production have been paid. Profit exists whenever total revenue is greater than total cost.

circular flow of economic activity

The economic relationships that exist between different economics groups in an economy.

ethics

The principles of conduct, such as right and wrong, morality and immorality, good and bad.

negative externality

An adverse side effect of an act that is felt by others.

contract

An agreement between two or more people to do something.

household

An economic unit of one person or more that sells resources and buys goods and services.

private property

Any good that is owned by an individual or a business

public property

Any good that is owned by the government.