Shared Flashcard Set

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ECON
Chapter 17
21
Business
Undergraduate 2
05/06/2010

Additional Business Flashcards

 


 

Cards

Term
Marginal Social Cost Pollution
Definition

 the additional cost imposed on society as a whole by an additional unit of pollution.

Term
Marginal Social Benefit of Pollution
Definition

  is additional gain to society as a whole from an additional unit of pollution.

Term
Socially Optimal Quality of Pollution
Definition

   is the quantity of pollution that society would choose if all the costs and benefits of pollution were fully accounted for.  (Figure 17-1)

Term
External Cost
Definition

  is an uncompensated cost that an individual or firm imposes on others. (Figure 17-2)

Term
External Benefit
Definition

  a benefit that an individual or firm confers on others without receiving compensation

Term
Externalities
Definition
external cost and benefits known as externalities
Term
Negative Externalities 
Definition
External Costs
Term
Positive Externalities
Definition
External benefits
Term
Coarse Thereom
Definition

  even in the presence of externalities an economy can always reach an efficient solution as long as transaction costs—deal—are sufficiently low.

- Private Solutions to Externalities

Term
Internalize the Externality
Definition

 take external costs or benefits into account

Term
Environmental Standards
Definition

 are rules that protect the environment by specifying actions by producers and consumers.

Term
Emissions Taxes
Definition

 is a tax that depends on the amount of pollution a firm produces. (Figure 17-3)

Term
Pigouvian Taxes
Definition

   takes designed to reduce external costs

Production, Consumption and Externalities—Private vs. Social Benefits

      (Figure 17-4)

Term
Marginal Social Benefit of a Good or Activity
Definition
equal to the marginal benefit that accures to consumers plus its marginal external benefit
Term
Pigouvian Subsidy
Definition

   is a payment designed to encourage activities that yield external benefits.

Term
Technology Spillover
Definition

   is an external benefit that results when knowledge spreads among individuals and firms

Term
Industrial Policy
Definition

   a policy that supports industries believed to yield positive externalities.

Term
Marginal Social Cost of a Good or Activity
Definition

 is equal to the marginal cost of production plus its marginal external cost. (Figure 17-5)

Term
Network Externality
Definition

     a good is subject to a network externality when the value of the good to an individual is greater when a large number of other people also use the good.

Term
Positive Feedback
Definition
a good is subject to positive feedback when success breeds greater success and failure breeds failure
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