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
