Micro Chapter 10

a local cafe which allowed patrons to smoke was recently forced to close its doors because it did not comply with the local clean air standards. this decision provides an example of

Pigovian taxes

a positive externality occurs when

a. Jack receives a benefit from John's consumption of a certain good.

Research into new technologies

a. provides positive externalities because it creates knowledge others can use.

The height of the supply curve at any given quantity of coal shows the

cost to the producer of the last unit of coal sold

Pigovian taxes

encourage consumers to avoid sales tax by shopping online

Hikers frequently claim that livestock grazing in wilderness recreation areas reduces the satisfaction of their recreational hiking experience

grazing cows create negative externalizations which make hiking less pleasant

A positive externality

is a benefit to a market bystander

one drawback to industrial policy is that

measuring the size of spillovers from different markets is difficult.

Because decisions in a market economy are guided by individual self-interest, there is

nevertheless the ability to achieve desirable economic well being for society as a whole

reaching an efficient bargain is difficult when the

number of interested parties is large

According to the coase theorem

private parties can bargain to reach an efficient outcome

to enhance the well being of society, a social planner will encourage firms to increase production when

technology spillovers are associated with production

At any given quantity, the height of the supply curve for pliers shows the

the cost of the marginal seller