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The assertion that consumer preferences determine the production of goods and services, influencing the allocation of resources in a market economy.

A function that ranks social states as less desirable, more desirable, or indifferent for society, based on the set of individual utilities.

The loss of potential gain from other alternatives when one alternative is chosen, an essential concept for understanding the trade-offs of resource allocation.

A situation in which the allocation of goods and services by a free market is not efficient, often leading to a net social welfare loss.

A tax that is a constant amount, no matter the change in circumstance of the taxed entity.

A tax on any market activity that generates negative externalities, intended to correct an inefficient market outcome and does so by being set equal to the social cost of the negative externalities.

A tax rate that increases as the taxable amount increases, with the purpose of redistributing income to address social welfare and equity.

Legislation that establishes a lowest legally acceptable pay that workers can receive from employers, aiming to ensure a living wage and reduce poverty.

Goods for which demand increases as the price increases, due to their exclusive nature and appeal as status symbols, contrary to the law of demand.

Goods and services that governments believe will be under-provided by the market and so are often provided free at the point of use so that consumption does not depend primarily on the ability to pay for the good or service.

An ethical theory that prescribes actions that maximize happiness and well-being for the majority of a population.

A program where the government provides a regular, unconditional sum of money to all citizens regardless of whether they are employed or meet any other condition.

A state where it is impossible to make any one individual better off without making at least one individual worse off, focusing on efficiency rather than equity.

A graphical representation of the distribution of income or wealth within a society, providing a visualization of inequality.

A consequence of an industrial or commercial activity which affects other parties without this being reflected in market prices.

A sociopolitical framework that conceptualizes and evaluates individual well-being, focusing on the true freedom individuals have to pursue the goals they choose.

A measure of statistical dispersion intended to represent the income or wealth distribution of a nation's residents, and is the most commonly used measure of inequality.

A common economic concept and a potential conflict between objectives of fairness (equity) and optimal resource allocation (efficiency).

The transfer of income, wealth, or property from some individuals to others through a social mechanism such as taxation, charity, welfare, land reforms, monetary policies, confiscation, divorce, or tort law.

A principle that suggests that a change in the economy is a Pareto improvement if those that are made better off could hypothetically compensate those that are made worse off, and still be better off.

A theoretical framework that proposes principles of justice that should be followed to ensure fairness in the distribution of wealth, income, and opportunity.

Goods that are non-excludable and non-rivalrous in consumption, which means that individuals cannot be effectively excluded from use and where use by one individual does not reduce availability to others.

The loss of economic efficiency that can occur when equilibrium for a good or service is not achieved or is not achievable, often due to taxes or subsidies creating a difference between supply and demand.

A form of financial aid or support extended to an economic sector generally with the aim of promoting economic and social policy.