ECON-1203 Chapter : Chapter 5
Document Summary
Externalities: externalitites: the side-effects which may arise through the production and consumption process. Third parties, not market participants, generally bear the majority of the costs or benefits: negative externality: market actions or behavior producing an adverse side effect. Pollution is the primary example: positive externalities might include beautification projects, architecture, and public safety, when measuring the overall impact of an activity, one should consider the social costs associated with the activity. He spent at least 3 days on the week flying. What would be the msc: private costs would be the literal costs associated with travel. The external costs would be the delays and interruptions caused by air force one. The demand curve lies further inward than it should, and the resulting output level is less than what the socially optimal level might suggest. It is possible to capture the externality into cost benefit calculations.
