Chapter 10 Micro Final Flashcards
What is an example of social costs?
The costs to buy materials or equipment and pollution in the Ithaca factory Therm
Corrective Taxes
A tax to regulate or change negative externalities
What is a SOCIAL example of a positive externality?
Tesla creates knew knowledge that others can use like the electric car
How do market based policies achieve a more efficient income? (Positive externality)
Tax on cigarettes
Consumers gain an incentive not to buy cigarettes
Therefore consumers can have a more efficient income by not wasting money on cigarettes
What is an example of a Social Benefit (Positive Externality)
President Obama implementing Obamacare
Social benefit is people who could not afford healthcare now have it.
What is an example of private costs?
Price Google pays to hire new workers
Tradable Pollution Permits Definition
Cap and Trade that creates a market to trade and the ability to produce
Why does negative externalities lead to inefficient overproduction?
Due to when the supply of product in the market is greater than the demand
Private Subsidies (positive government Externality)
Form of aide to a private firm
Vouchers (positive government Externality)
Documentation that a consumer uses to get money back
Negative Externality Example (Government)
North Korea nuking the United States
What is 1 way to Mandate Clean Technology?
Regulations
Social Cost =
Private costs + externalities
What is 1 example of establishing Property Rights (Negative Government Externality)
Give each individual a plot of land so they don’t overuse the common resource
Therefore, this gives individuals an incentive to slow their consumption
What is another word for external benefits ( positive externality)
Positive beniefts
What is an example of The Coase Theorem?
Barking dog that constantly annoys friend
Am I going to give it up for my friend or am I going to keep it and care about the dog more
What is 1 example of Public Provisions (positive government Externality) Explain why.
Education because we want more of it.
Therefore the government provides education
What are 3 market based policies?
Subsidies
Corrective Taxes
Public Provisions
Private Cost
The cost that is directly caused by sellers
Name 3 ways how taxes, property rights, and pollution charges achieve a more efficient income? (Negative externality)
Regulations
Taxes
Zoneing
Name a positive externalities that leads to inefficient production? Explain why it does?
Education because people don’t account for the social benefits of education
Therefore they don’t consume enough of it
External Cost (positive externality)
The positive effect that an activity has on any third party
What are 2 SOCIAL examples of a Negative Externality?
Factory waste spilling into a lake with swimmers
Dog barking that disturbs neighbor
