ECON 1051 1nd Edition Lecture 18 Outline of Last Lecture I. Externalities and Environmental Goods a. ExamplesOutline of Current Lecture I. Externalities II. Effect of Externalities III. Negative Externalities IV. Positive Externalities Current LectureI. Externalities a. Definitioni. A benefit or cost that affects someone who is not directly involved in the production or consumption of a good or service ii. Positive and negative externalities exist II. Effect of Externalities a. Private Cost i. The cost born by the producer of a good or service1. Private cost of smoking = monetary and health costs for the smokerb. Social Cost i. The total cost of producing a good or service, including both the private and external cost c. Private Benefit i. The benefit received by the consumer of a good or service d. Social Benefit i. The total benefit from consuming a good or service including private and external cost III. Negative Externalities a. Examples i. Second-hand smoke, tire productionb. Causes These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.i. Causes over producing because the market doesn’t take in to account externalities ii. The over production of a good that causes negative externalities calls for government intervention IV. Positive Externalities a. Examplesi. Community garden, education b. Causes i. Causes under consumption of a good or service ii. Calls for the necessity of government
View Full Document
Unlocking...