Negative Externalities Flashcards
What are externalities?
spill-over effects arising from production and consumption for which no appropriate compensation is paid
What are negative production externalities?
these include pollution generated by a production process that imposes costs on others
What is a private cost?
A cost which is incurred by the economic agent
What is a social cost?
the cost of an activity to society
Do production negative externalities cause social cost or private cost to be higher?
Social cost
What is deadweight welfare loss on a market failure diagram?
the area of social welfare loss because the market output supplied is higher than the social optimum
Consumers are motivated by their own satisfaction measured in _______
Utility
Utility is the benefit received from ________
consumption
Do consumption negative externalities cause private or social benefit to be higher?
Private
