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3 Cards in this Set
- Front
- Back
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What is Social marginal costs? |
Socail marginal costs are the full costs of production/consumption. SMC = PMC + EC SOCIAL MARGINAL COSTS= PRIVATE MARGINAL COSTS + EXTERNAL COSTS |
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What is deadweight/welfare loss? |
Deadeweight/welfare loss is the combined loss of the consumer and the producer surplus. |
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How do you correct negative externalities? |
- TAX - increasing the cost of production, if we tax just enough to shift the supply curve from the PMC to SMC(Socially desirable) the externality will go. - Quotas - Is a physical limit of how much can be produced(intervention approach) |
