Economics 1021A/B Chapter Notes - Chapter 16: Bee Hives, Cost, Marginal Cost

• School: Western University
• Department: Economics
• Course: Economics 1021A/B
• Professor: Irene Trela

Document Summary

Externality: a cost of or a benefit from an action that falls on someone other than the person or firm choosing the action. Negative production externalities: burning coal to generate electricity emits carbon dioxide that is warming the planet. Positive production externalities: to produce honey, bee hives are placed next to an orange orchard, so the bees pollinate the oranges and benefit the orange orchard as well as make honey. Negative consumption externalities: smoking tobacco in a confined space creates fumes that pose a health risk to others. Positive consumption externalities: if you get a flu vaccine, your neighbour (who didn t get the vaccine) is less likely to get the flu. Private cost: cost that is borne by the producer of a good/service. Marginal private cost: the cost of producing an additional unit of a good/service that is borne by the producer.