positive and negative externalities

Question 1

define marginal private cost

Answer 1

the cost to an individual or firm of an economic transaction

Question 2

define marginal external cost

Answer 2

the spill over cost to third parties of an economic transaction

Question 3

define marginal social cost

Answer 3

the full cost to society of an economic transaction, including private and external

Question 4

marginal social cost calculation

Answer 4

marginal private cost + marginal external cost

Question 5

define marginal private benefit

Answer 5

the. benefit to an individual or firm
of an economic transaction

Question 6

define marginal external benefit

Answer 6

the spill over benefit to third parties of an economic transaction

Question 7

define marginal social benefit

Answer 7

the full benefit of an economic transaction including private and external

Question 8

marginal social benefit calculation

Answer 8

marginal private benefit + marginal external benefit

Question 9

define externalities

Answer 9

costs or benefits that spills over to third parties external to a market transaction

Question 10

define positive externalities

Answer 10

a positive spillover effect to third parties of a market transaction ; social benefits exceed private benefits

Question 11

define negative externality

Answer 11

a negative spillover effect to third parties of a market transaction; social costs exceed private costs

Question 12

define merit goods

Answer 12

a good that would be under consumed in a free market as individuals do not fully perceive the benefits obtained from consumption