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DEFINITIONS (CHAPTER 8)
TERM DEFINITION TERM DEFINITION

Externalities Costs or benefits that spill over to third parties external to a Merit good A good that would be underconsumed in a free market, as
market transaction individuals do not fully perceive the benefits obtained from
consumption

Marginal Private The cost to…

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Income a flow of earnings to a factor of production over a period of Geographical where workers find it difficult to move to where employment
time, e.g. wages or salaries immobility opportunities may be, due to family ties and difference in
housing costs

Wealth stock of owned assets, e.g. housing…

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