Econ Chapter 5

without property rights, externalities are:

likely to result

the total benefit from consuming a good or service, including both the private benefit and any external benefit is a:

social benefit

the total cost of producing a good, including both the private and any external cost is called:

social cost

what 3 important things happen when the government imposes price floors or ceilings

some people win, some people lose, there is a loss of economic efficiency

what causes externalities?

lack of well-defined, enforced property rights

establish property rights and let the affected parties bargain and trade with one another is called

coase theorem

for economic surplus to be maximized, the following assumptions are met:

competitive market, no externalities of production or consumption, perfect information for all involved parties

competitive market outcome is economically efficient means that:

economic surplus is maximized

the benefit felt by people other than the consumer or the producer trading in the market is called:

external benefit

a cost felt by people other than the consumer or the producer trading in the market is called:

external cost

"spillover" onto bystanders is referred to as:

externality

a situation in which the market fails to produce the efficient level of output is called:

market failure

when a deadweight loss emerges and reduces social surplus, is the result?

market failure

smoking and anti-biotic use are examples of:

negative consumption externality

production of many goods is an example of:

negative production externality

vaccines and education are examples of:

positive consumption externality

research and development discoveries are example of:

positive production externality

the benefit received by the consumer of a good or service is a:

private benefit

the cost borne by the producer of a good or service is called:

private cost

social cost is the sum of what?

private cost and external cost

the rights of individuals or businesses have to the exclusive use of their property, including the right to buy or sell it is called:

property rights