Postive/negative Externalties Flashcards
What graph is used to show externalities
Marginal **private/social **
Cost /benefit
Positive consumption, externality shifts ……
Societal Benefits in Consumption
>
Private Benefits in Consumption
Marginal social benefit right/up
Negative consumption, externality shifts….
Marginal society benefit down/left
Positive production externality shifts……
Marginal society cost down
Negative production externality shifts…..
Marginal society cost up
What is a negative production externality
A good with negative effects when made
What is a negative consumption externality
A good with **negative effects when consumed **
E.G fast food(good)=diabities(effect)
What does society want with a good with negative production externalities
Less production
E.G pollution(plastic bottlels being the de-merit good)
What does society want with a good with negative consumption externalities
Less consumption
E.G. Alcohol
What does society want with a good with postive production externalties
More production( as its under-produced)
E.G. development programs
Externalities occur when………
There is a difference between private and social costs/benefits
positive consumption externality occurs when
consuming a good cause a positive externality to a third party
(social benefits of consumption exceed the private benefits)
In a free market without government intervention there will be ………..
under-consumption of goods with positive consumption externalities
This leads to market failure
an example of a good/service that has a positive Consumption externality
library
vaccinations
education
an example of a private benefit with Postive Externatlies
getting a degree
1)Higher salary for u in future
2)using ur Knoweldge to create new technology
that socity beneifts from
