Econ 1B: Microeconomics – Chapter 5

A right or license granted to an individual to market a company's goods or services or use its brand name. The individual firms are independently owned but must meet certain conditions to continue to use the name.

A situation in which the structure of incentives is such that the political process, including democratic political decision-making, will encourage individuals to undertake actions that conflict with economic efficiency.

A situation in which the structure of incentives is such that markets will encourage individuals to undertake activities that are inconsistent with economic efficiency.

An item purchased often by the same buyer.

A person who receives the benefit of a good without paying for it. Because it is often virtually impossible to restrict the consumption of public goods to those who pay, these goods are subject to free-rider problems.

Goods for which rivalry among consumers is absent and exclusion of nonpaying customers is difficult.

Spillover effects that generate benefits for nonconsenting parties.

Spillover effects that reduce the well-being of nonconsenting parties.

Spillover effects of an activity that influence the well-being of nonconsenting parties.

A situation that occurs when (1) all activities generating more benefit than cost are undertaken and (2) no activities are undertaken for which the cost exceeds the benefit.