T8 - Externalities *** GRAPHS Flashcards
What is an externality
Affect on a third party when a good or service isproduced and consumed and no compensation is payed
What is MPB/MPC
Benefit/Cost to eco agenet
WHat si MSB/MSC
The ebenfit/cost to eco agenet and society
When is there beenfit maxamisation
MC = MB
Wiht positive externalities what is there
Social Benefit > Private Benefit
What are engatiev production externalties
When production eads to a harmful affect to unrelated third parties
When is there social optimum level fo output
MSC = MSB
What is postive production externality
Producing somethign, beenfits an unrelated third party
Exampels of PE
Training
R and D into new tech
Education
EHalth
Employement
Exampels fo NE
Air po;;ution
traffic
Noise pollution
Food waste
What do externaltieis lead to
The wrogn qty fo a good beign provided and consumed
what will free market price be for goods that rpoduce negative externalites
too low and too much of a quantity woudl eb prodcued
what will price and quantity be for goods that produce positive extenaltieis
too high and not enough produced/cosnuemed
if a good geenrates negatiev externaltities is it a demrit good
no for exampels cars produce pollution btu they arent seen as demrit goods
