Economics, 3rd Edition

Tragedy of the Commons 

a parable that illustrates why 

common resources get used more than is desirable from the 

standpoint of society as a whole

transaction cost 

the opportunity cost of carrying out a 

transaction in any market

transaction costs 

the costs that parties incur in the process of 

agreeing and following through on a bargain

transfer earnings 

the minimum payment required to keep a 

factor of production in its current use

transfer payment 

a payment for which no good or service is 

exchanged

trend 

the underlying long-term movement in a data series

trough 

where economic activity reaches a low and the decline 

ends

unemployment insurance 

a government programme that 

partially protects workers’ incomes when they become unemployed

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GLOSSARY  813