Externalities

Question 1

What are external costs?

Answer 1

Negative spillover effects of consumption or production -they affect third person parties in a negative way

Question 2

What are the 6 external costs?

Answer 2

-Noise pollution
-Air pollution
-Water pollution
-Overcrowding
-Traffic congestion
-Resource depletion

Question 3

What are external benefits?

Answer 3

Positive spillover effects of consumption or production - they affect third person parties in a negative way

Question 4

What are some examples of external benefits?

Answer 4

Education
Healthcare

Question 5

What are private costs?

Answer 5

Costs of an economic activity to individuals and firms

Question 6

What are social costs?

Answer 6

Costs of an economic activity to the society as well as individuals and firms

Question 7

What are private benefits?

Answer 7

Rewards to third parties of an economic activity, such as consumption or production

Question 8

What are social benefits?

Answer 8

Benefits of an economic activity to the society as well as individuals and firms

Question 9

How does the government deal with externalities?

Answer 9

-Taxes
-Fines
-Subsidies
-Government regulation
-Pollution permits