Th1.3: Negative Production Externalities Flashcards
1
Q
When do negative externalities of production occur?
A
when social costs are greater than private costs
2
Q
It will produce where MPB =
A
MPC
3
Q
Refer to PP
Look at Graph 18. Describe what is happening at Q1
A
the costs to the society are higher than the benefits to society, resulting in a welfare loss of the shaded triangle
4
Q
Refer to PP
Look at Graph 18. Where should the economy produce at?
A
MSB = MSC
5
Q
Why does the difference between MSC and MPC increase as output grows?
A
because external costs grow the more that people do something
6
Q
Give two examples of negative production externalities
A
noise pollution from planes
industrial waste
7
Q
Go draw Graph 18 three times.
A
ACTUALLY DO IT
