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Microeconomics > Session 10: Externalities and transaction costs > Flashcards

Session 10: Externalities and transaction costs Flashcards

1
Q

What is an externality?

A

The effects of production and consumption decisions not directly reflected in market prices

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2
Q

What is a positive externality?

A

An action that imposes benefit on others

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3
Q

What is a negative externality?

A

An action that imposes cost on others

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4
Q

What are some incentives to reduce negative externalities?

A

Standards

Fees/Taxes

Transferable permits (inc. cap and trade)

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Microeconomics (10 decks)

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