externalities

Question 1

What are externalities?

Answer 1

costs or benefits falling on bystanders

Question 2

What is a positive externality?

Answer 2

benefit received by people other than consumer or producer

Question 3

What is a negative externality?

Answer 3

cost paid by people other than the consumer or producer

Question 4

What is private cost/benefit external cost/benefit and social cost/benefit?

Answer 4

private cost: cost paid by consumer or producer
external cost: cost paid by someone not consumer or producer
social cost: cost to everyone (private+external)

Question 5

When externalities are present how much do markets provide relative to what is efficient for society as a whole?

Answer 5

negative externalities: costs are too low
positive externalities: costs are too high

Question 6

What are some solutions to addressing externalities?

Answer 6

NO SOLUTIONS only trade offs
Taxes, subsidies
Comman and control/regulations
Market like arrangements