Chapter 3 Economics` vocab

I will not tell you why i start making notes from chapter 3.

Productive efficiency : where production takes place using the least amount of scarce resources.



Economic efficiency : both productive and allocative efficiency are achieved. (Allocative efficiency is where consumer satisfaction is maximised.)



Free market mechanism : the system which the market forces of demand and supply determine prices and the decisions made by firm and consumers.



Information failure : the lack of information resulting in consumers and producers making decisions that do not maximise welfare. ( welfare: prosperity. 福利)



Asymmetric information : information not equally shared between two parties.



Externality : an effect where by those not directly involved in taking a decision are affected by the actions of others. [ such as the residents living along the flight path are affected by the noise.



Private costs/benefits : the costs/benefits incurred/accured by those taking a particular action.



Externality costs / benefits : the costs / benefits of the consequence of the externalities to the third parties.



Social costs / benefits : the total costs / benefits of a particular action.



Negative externality : the social costs is exceeded the private costs. [ Chewing gum ]



positive externality : the social benefit is exceeded the private benefits. [ Education ]



Merit goods : these goods have more private benefits than their consumers actually realise.



Demerit goods : goods have more harmful effect than their consumers actually realise.



Public goods : goods that collectively consumed and have the characteristics of non-excludability and non-rivalry.



Free rider : someone who directly benefits from the consumption of public goods , but does not contribute towards it.



Direct tax : taxes the income of people and firms which cannot be avoid.



Indirect tax : taxes levied on goods and services.



Polluter pays principle : like green tax, whereby the polluter pay explicitly for pollution caused. ( explicitly : exact, 明确地)



Subsidy : the payment from government to encourage production or consumption.



Tradable permit : a permit that allows the owner emit a certain amount of pollution, and if it is unused or partially used, can be sold to another polluter.