positive consumption and negative production externalities Flashcards

1
Q

NE in production

A

cost to 3rd parties as a result of action of producer(airplanes cause pollution)
price is too low
over production
MSC > MPC

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2
Q

PE in consumption

A

benefits to 3rd parties as a result of the actions by consumers(healthcare)
MSB > MPC
under consumption
misallocation of resources as people ignore the external benefits

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