A good that, once consumed by one person, cannot be consumed by somebody else; such a good has excludability and is rivalrous
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Public good
A good that is non-exclusive and non-rivalrous -- consumers cannot be excluded from consuming the good, and consumption by one person does not affect the amount of the good available for others to consume
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Free rider problem
When an individual cannot be excluded from consuming a good, and thus has no incentive to pay for its provision
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Merit good
A good that brings unanticipated benefits to consumers, such that society believes it will be underconsumed in a free market
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Demerit good
A good that brings less benefit to consumers than they expect, such that too much will be consumed by individuals in a free market
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Asymmetric information
A situation in which some participants in a market have better information about market conditions than others
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Adverse selection
A situation in which a person at risk is more likely to take out insurance
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Moral hazard
A situation in which a person who has taken out insurance is prone to taking more risk
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Other cards in this set
Card 2
Front
Public good
Back
A good that is non-exclusive and non-rivalrous -- consumers cannot be excluded from consuming the good, and consumption by one person does not affect the amount of the good available for others to consume
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