Term
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Definition
| "Playing to win," drives down costs |
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Term
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Definition
| When economists use their term to refer to a state of affairs; a homogeneous state with no barriers preventing the mobility of resources |
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Term
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Definition
| When two compete for pricing, they are competing for both innovation and time. Using more time to create a product allows for more innovation, however it is best to produce a product while demand for the product is high. |
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Term
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Definition
| Price, Quality, Cost, Innovation |
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Term
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Definition
| A single seller of a product or service |
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Term
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Definition
| Law, Natural Monopoly, and ownership of a scarce input |
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Term
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Definition
| Because of economies of scale, only one firm fits in a market |
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Term
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Definition
| Charging different prices to different customers for the same product when the price differences do not arise from differences in cost |
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Term
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Definition
| When consumers purchase a product & resell it at a higher price |
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Term
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Definition
| Selling a product at one initial price and then charging additionally for each time the service is used |
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Term
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Definition
| The uncompensated effect on one person's actions on the well-being of a bystander |
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Term
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Definition
| When the effect on the bystander is adverse |
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Term
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Definition
| When the effect on the bystander is beneficial |
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Term
| technological externalities |
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Definition
| Create inefficiency because they are outside the price system |
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Term
| internalizing an externality |
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Definition
| Involves altering incentives so that people take account of the external effects of their actions |
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Term
| institutional(Cosean)approach |
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Definition
| Changes the structure of property rights so that participants take into account all the actions of their behaviors |
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Term
| fiscal(pigovian) approach |
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Definition
| Taxes or subsidies to equate private cost(benefit) and social cost(benefit) |
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Term
| command-and-control approaches |
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Definition
| non-economic command and control regulation of technology or behavior |
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Term
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Definition
| If private parties can bargain without cost over the allocation of resources, they can solve the problem of externalities on their own |
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Term
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Definition
| The costs that parties incur in the process of agreeing to and following through on a bargain |
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Term
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Definition
| When others can be prevented from using a good |
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Term
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Definition
| If one person's use of a good diminishes other people's use of a good |
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Term
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Definition
| Goods that are both excludeable and rival in consumption |
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Term
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Definition
| Goods that are neither excludaeble nor rival in consumption |
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Term
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Definition
| Goods that are rival in consumption but not excludeable |
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Term
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Definition
| Goods that are excludeable but not rival in consumption |
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Term
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Definition
| Identical products should be the same price everywhere, assuming no transaction costs |
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Term
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Definition
| Continually adjusting prices to take changing demand into account |
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Term
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Definition
| A tax to bring about efficient level of output in the presence of externalities |
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Term
| The cost of the externality |
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Definition
| A Pigovian tax must be set equal to what in order to be efficient |
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Term
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Definition
| When marginal benefit equals marginal cost |
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Term
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Definition
| Benefitting from a good without paying for it |
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Term
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Definition
| The tendency for a common resource to be overused |
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