Economics, 3rd Edition

progressive tax 

a tax for which high-income taxpayers pay a 

larger fraction of their income than do low-income taxpayers

property rights 

the exclusive right of an individual, group or 

organization to determine how a resource is used

proportional or flat tax 

a tax for which high-income and  

low-income taxpayers pay the same fraction of income

prospect theory 

a theory that suggests people attach different 

values to gains and losses and do so in relation to some 

reference point

public choice theory 

the analysis of governmental behaviour, 

and the behaviour of individuals who interact with government

public goods 

goods that are neither excludable nor rival

public interest 

making decisions based on a principle where the 

maximum benefit is gained by the largest number of people at 

minimum cost

public saving 

the tax revenue that the government has left after 

paying for its spending

public sector 

that part of the economy where business activity 

is owned, financed and controlled by the state, and goods and 

services are provided by the state on behalf of the population 

as a whole