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9 Cards in this Set
- Front
- Back
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Private cost |
Costs that effect only the producer/consumer |
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External cost/ negative externality |
Costs that impact 3rd parties |
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Social cost |
Private costs+external costs |
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Private benefit |
Benefit for consumer, showed by willingness to pay |
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External benefit/ positive externality |
Something impacting 3rd parties which cause social benefit to be bigger than the private benefit |
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Social benefit |
When society gains from the externalities |
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Social optimum equilibrium |
High price= low quantity so as few negative externalities produced as possible |
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Market failure |
Price mechanism causes an inefficient allocation of resources so leads to a net welfare loss |
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Three types of market failure |
-externalities -under provision of public goods -information gaps |
