ECON 2000 1st Edition Lecture 20Outline of Last Lecture XIX. Market Failuresa. Government interventionb. 5 economic market failuresOutline of Current LectureXX. Factors of market failuresa. Purely private good/servicesb. Private goods/ services with significant externalitiesc. Public goods/ serviceXXI. Externalitiesa. Private Benefit Demandb. Social Benefit Demandc. Private Cost Supplyd. Social Cost Supplye. Privatef. Publicg. 3 steps in solving Externality problemsCurrent LectureXX. Factors of market failuresa. Purely private good/servicesi. Products that convey their benefits to the buyer and seller onlyb. Private goods/ services with significant externalitiesi. Products that primarily convey their benefit to the buyer and seller, but also impose a significant external benefit or cost on some 3rd party who is not involved in the initial market transactionc. Public goods/ servicei. Products must be nonrival and non-excludable1. Non rival: ex. Light- not just for 1 persons useThese 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.2. Non-excludable: once the product has been provided, it is impossible/ expensive for the firm to exclude the nonpayersXXI. Externalitiesa. Private Benefit Demandi. Trying to maximize person benefitsii. EX) smoking3. Not thinking about second hand smokeb. Social Benefit Demandi. Consumer is acknowledging any positive or negative externalitiesc. Private Cost Supplyi. Production costsd. Social Cost Supplyi. Productions and acknowledgement of externalitiese. Privatei. Thinking about selff. Publici. Thinking about self and othersg. 3 steps in solving Externality problemsi. What is the externality? Good or Bad? Demand or Supply? Demand or Supply?ii. Model itiii. Find
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