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Principles of Microeconomics 3e

Key Terms

Principles of Microeconomics 3eKey Terms

Key Terms

external benefits (or positive externalities)
beneficial spillovers to a third party of parties, who did not purchase the good or service that provided the externalities
free rider
those who want others to pay for the public good and then plan to use the good themselves; if many people act as free riders, the public good may never be provided
intellectual property
the body of law including patents, trademarks, copyrights, and trade secret law that protect the right of inventors to produce and sell their inventions
nonexcludable
when it is costly or impossible to exclude someone from using the good, and thus hard to charge for it
nonrivalrous
even when one person uses the good, others can also use it
positive externalities
beneficial spillovers to a third party or parties
private benefits
the benefits a person who consumes a good or service receives, or a new product's benefits or process that a company invents that the company captures
private rates of return
when the estimated rates of return go primarily to an individual; for example, earning interest on a savings account
public good
good that is nonexcludable and non-rival, and thus is difficult for market producers to sell to individual consumers
social benefits
the sum of private benefits and external benefits
social rate of return
when the estimated rates of return go primarily to society; for example, providing free education
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