MicroEconomics Chapter 16: Externalities

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Externality

answer

Is a cost of or benefit from an action that falls on someone other than the person or firm choosing the action.

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Negative Externality

answer

An externality that imposes a cost. There are negative/positive production externalities and negative/positive consumption externalities.

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Marginal Private Cost

answer

Is the cost of producing an additional unit of a good or service that is borne by its producer.

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Marginal External Cost

answer

Is the cost of producing an additional unit of a good or service that falls on people other than the producer.

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Marginal Social Cost (MSC)

answer

Is the marginal social cost incurred by the producer and by everyone else on whom the cost falls---by society.
A point on the MSC curve shows the sum of:
MSC= MC + Marginal External Cost

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Property Rights

answer

Are legally established titles to the ownership, use, and disposal of factors of production and goods and services that are enforceable in the courts.

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Abatement Technology

answer

Is a production technology that reduces or prevents pollution.

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Coase Theorem

answer

Is the proposition that if property rights exist and the transactions costs of enforcing them are low, then private transactions are efficient and it doesn't matter who has the property rights.

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Transaction Cost

answer

Are the opportunity costs of conducting a transaction.

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Pigovian Taxes

answer

Governments use this tax as an incentive for producers to cut back the pollution they create.

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Marginal Private Benefit (MB)

answer

Is the benefit that the consumer of a good receives from an additional unit of it.

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Marginal External Benefit (MEB)

answer

Is the benefit from an additional unit of a good or service that people other than its consumer enjoy.

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Marginal Social Benefit (MSB)

answer

Is the marginal benefit enjoyed by society. MSB=MB+MEB.

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Public Production

answer

A good or service is produced by a public authority that receives its revenue from the government.

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Voucher

answer

Is a token that the government provides to households, which they can use to buy specified goods or services.

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Intellectual Property Rights

answer

Are rights given to persons over the creations of their minds.

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Patent/Copyright

answer

Is a government-sanctioned exclusive right granted to the inventor of a good, service, or productive process to produce, use, and sell the invention for a given number of years.

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question

Externality

answer

Is a cost of or benefit from an action that falls on someone other than the person or firm choosing the action.

question

Negative Externality

answer

An externality that imposes a cost. There are negative/positive production externalities and negative/positive consumption externalities.

question

Marginal Private Cost

answer

Is the cost of producing an additional unit of a good or service that is borne by its producer.

question

Marginal External Cost

answer

Is the cost of producing an additional unit of a good or service that falls on people other than the producer.

question

Marginal Social Cost (MSC)

answer

Is the marginal social cost incurred by the producer and by everyone else on whom the cost falls---by society.
A point on the MSC curve shows the sum of:
MSC= MC + Marginal External Cost

question

Property Rights

answer

Are legally established titles to the ownership, use, and disposal of factors of production and goods and services that are enforceable in the courts.

question

Abatement Technology

answer

Is a production technology that reduces or prevents pollution.

question

Coase Theorem

answer

Is the proposition that if property rights exist and the transactions costs of enforcing them are low, then private transactions are efficient and it doesn't matter who has the property rights.

question

Transaction Cost

answer

Are the opportunity costs of conducting a transaction.

question

Pigovian Taxes

answer

Governments use this tax as an incentive for producers to cut back the pollution they create.

question

Marginal Private Benefit (MB)

answer

Is the benefit that the consumer of a good receives from an additional unit of it.

question

Marginal External Benefit (MEB)

answer

Is the benefit from an additional unit of a good or service that people other than its consumer enjoy.

question

Marginal Social Benefit (MSB)

answer

Is the marginal benefit enjoyed by society. MSB=MB+MEB.

question

Public Production

answer

A good or service is produced by a public authority that receives its revenue from the government.

question

Voucher

answer

Is a token that the government provides to households, which they can use to buy specified goods or services.

question

Intellectual Property Rights

answer

Are rights given to persons over the creations of their minds.

question

Patent/Copyright

answer

Is a government-sanctioned exclusive right granted to the inventor of a good, service, or productive process to produce, use, and sell the invention for a given number of years.

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MicroEconomics Chapter 16: Externalities

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