Chapter 17 Flashcards

1
Q

What are externalities?

A

The difference between social and private costs or social and private benefits

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What’s the private cost?

A

A cost of an activity to an individual economic unit.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What’s the social cost?

A

The cost of an activity to both the individual economic unit and to the 3rd party as well.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is a negative production externality and how can it be solved?

A

Social cost > Private Cost
solved by the imposition of tax

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What is a positive consumption externality and how can it be solved?

A

Social benefit > Private benefit
solved by the imposition of a subsidy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is a negative consumption externality and how can it be solved?

A

Social benefit < Private benefit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is a positive consumption externality and how can it be solved?

A

Social cost < private cost

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What are private benefits?

A

Benefits to the individual economic unit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What are social benefits?

A

Benefits to the individual economic unit and the3rd party

How well did you know this?
1
Not at all
2
3
4
5
Perfectly