the basics of externalities

Question 1

what types of goods cause positive externalities

Answer 1

merit goods

Question 2

what types of goods cause negative externalities

Answer 2

demerit goods

Question 3

why does market failure occur (u can kinda just read this is ur looking at this first time after ages)
also be kind to yourself

Answer 3

free market fails to allocate resources at societies best interests, so there is an insufficient allocation of scarce resources
economic and social welfare is not maximized where there is market failure

Question 4

what is marginal private benefit

Answer 4

cost to a firm of producing 1 extra unit

Question 5

what is marginal social cost

Answer 5

the extra cost on society per extra unit consumed

Question 6

what 2 things make up the msc

Answer 6

marginal external costs
marginal private costs

Question 7

what is marginal social benefit

Answer 7

extra benefit on society per extra unit consumed

Question 8

what 2 things make up msb

Answer 8

marginal external benefit
marginal private benefit