economics final

characteristics of private goods

- -

What is an external benefit?

- A benefit from a good experienced by someone other than the person who buys the good - -

examples of negative externalities

-air pollution from a manufacturing plant. -disrupted sleep from a neighbor's loud music. -an illness caused by secondhand cigarette smoke.

characteristics of public goods

-nonrivalous -nonexcludable

characteristics of free riders

-wants to benefit from what other people are paying for -

what is a private optimal quantity

-where private cost and private value cross -

where would the social optimal quantity be?

-where social cost crosses with demand

Miguel, Maria, and Marcos all would like a place to sit while waiting at their children's bus stop. The neighborhood association is considering installing several park benches at the bus stop. Miguel values the benches at $20, Maria at $30, and Marcos at $40. The park benches and labor for installation cost $100. If Miguel, Maria, and Marcos are the only residents who value the benches, what should the neighborhood association do?

Do not install the park benches because the costs outweigh the benefits.

what type of goods provide external benefits?

both private and public

what will happen if people do not consider impacts on personal well-being?

he will overproduce

Marginal personal cost (mpc) =

marginal personal benefit

Marginal Social Benefit (MSB) =

marginal personal benefit + marginal externality benefit

Marginal Social Cost (MSC) =

marginal personal cost + marginal externality cost

marginal social cost (msc) =

marginal social benefit

per unit tax on negative externalities

moves marginal cost curve to the left

an externality

the uncompensated impact of one person's actions on the well-being of a bystander

how to find equilibrium price?

where supply curve and demand curve cross