Exam 3 Flashcards
Private Cost
The cost borne by the producer of a good or service
Excludable
You can keep others from having something you purchased specifically when they have not purchased the goods themselves
Nonexcludable
A public good that is very costly and often impossible to exclude someone or groups from using the good and thus hard to charge for it
Rival
Your personal ownership or consumption diminishes another person or groups consumption of the good
Social Cost
The total cost of producing a good or service, including both the private cost, and any external cost.
Price Elasticity of Demand formula
%change of Q/% change of P
Substitutes
Goods and services that can be used for the same purpose
Positive externality
Occurs when a third-party benefits from a transition they are not directly involved in.
Sellers
Face increasing marginal cost to produce electricity
Buyers
Face decreasing marginal, benefits of additional electricity use
Complements
Goods and services that are used together
Marginal social benefit
2nd demand curve
Negative Externality
Occurs when a third-party cost from a transition they are not directly involved in
Marginal Private benefit
1st demand curve
Private Benefit
The benefit received by the consumer of a gutter service
Social Benefit
The total benefit from consuming a good or service, including both the private benefit and any external benefit.
Elastic
It’s often used to describe how demand for a product changes in response to price changes
Marginal Private cost
1st Supply Curve
Marginal social cost
2nd supply curve
Externality
A benefit or cost that affects someone who is not directly involved in the production or consumption of a good service.
Perfectly Elastic
No change in price is possible
Non rival
Even when one person use the public good another person can use it as well
Perfectly Inelastic
No change in quantity as possible
Unrelated
Goods do not impact each others purchasing power
Income elasticity formula
%change of Q/%change of I
