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Cards In This Set
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"the uncompensated impact of one person's actions on the well-being of a bystander"
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Externality
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If the impact of one person's actions on the well-being of a bystander is adverse, it is called ?
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Negative externality
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If the impact of one person's actions on the well-being of a bystander is beneficial, it is called ?
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Positive externality
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The demand curve is measured by ______?
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The consumers willingness to pay
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What is the difference between the social cost curve and the supply curve?
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The supply curve reflects the cost of pollution emmitted/ the social cost curve is ABOVE the supply curve because it takes into account external costs imposed on society
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In absence of market failures, the competitive market outcome is efficient, it ________?
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Maximizes total surplus
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What costs are included in SOCIAL COST?
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Private AND external cost
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The demand curve does NOT reflect ____?
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The value to society of the good
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Social value is _____ private value?
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Greater than
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The social value curve lies ____ the demand curve?
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Above
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"altering incentives so that people take account of the external effects of their actions"
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Internalizing the externality ("the use of tax" is an incentive because it encourages people/businesses to use a smaller quantity)
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The demand curve refects _____?
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The value of buyers (consumers)
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The supply curve reflects _____?
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The cost of sellers
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The equilibrium quantity (Q) maximizes the total value to buyers minus _____?
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The total cost of sellers
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In the presence of a positive externality, the social value of a good includes _____?
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Private value and external benefit
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