Types of Goods

• Rival vs. non-rival

• Excludability vs. non-excludability

Taxes

• Progressive

• Regressive

• Proportional

Externalities

• Negative: Spillover cost

• Positive: Spillover benefit

• DWL - Think of an arrow that points to where MSB = MSC

• How to correct: Per-unit tax (Negative) or per-unit subsidy (Positive)

Lorenz Curve

• Shows actual distribution of income

• Gini coefficient: Measures distance between perfect equality & actual distribution