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
