Enhance Your Learning with Economics - Externalities Flash Cards for quick learning
The uncompensated impact of one person's actions on the well-being of a bystander.
Benefits that are enjoyed by a third party as a result of an economic transaction between two other parties.
Costs that are suffered by a third party as a result of an economic transaction between two other parties.
External costs or benefits that occur during the production process of a good or service.
External costs or benefits that occur during the consumption of a good or service.
A situation in which the market fails to allocate resources efficiently due to the presence of externalities.
Actions taken by the government to correct market failures caused by externalities.
The process of incorporating the costs or benefits of externalities into the decision-making of individuals or firms.
The proposition that if property rights are well-defined and transaction costs are low, private bargaining can result in an efficient solution to externalities.
Taxes imposed on goods or activities that generate negative externalities, with the aim of reducing the quantity consumed or produced.
A situation in which individuals, acting independently and rationally, deplete a shared resource, leading to its degradation or depletion.
Goods that are non-excludable and non-rivalrous, meaning that one person's consumption of the good does not diminish its availability to others.
Goods that are non-excludable but rivalrous, meaning that one person's use of the resource reduces its availability to others.
The costs or benefits that arise from externalities, which can be positive or negative depending on the context.
The additional cost imposed on society as a whole by an additional unit of a good or service.
The additional benefit received by society as a whole from an additional unit of a good or service.
Efficiency occurs when the marginal social cost equals the marginal social benefit, while deadweight loss represents the loss of economic efficiency due to market distortions.
Solutions to externalities that arise through private bargaining and voluntary agreements between affected parties.
Solutions to externalities that involve government intervention and the imposition of regulations or taxes to internalize the costs or benefits.
Government policies that directly regulate the behavior of individuals or firms through the use of laws, regulations, or standards.
Government policies that use market mechanisms, such as taxes, subsidies, or cap-and-trade systems, to address externalities.
A market-based approach to controlling pollution, where the government sets a limit on total emissions and issues permits that allow firms to emit a certain amount. Permits can be bought, sold, or traded.
Government interventions that provide financial incentives, such as subsidies, or disincentives, such as taxes, to encourage or discourage certain behaviors related to externalities.
Legal rights that individuals or firms have over the use, control, and transfer of resources, including the right to exclude others from using the resource.
The costs associated with the process of exchanging goods, services, or resources, including the costs of searching for information, negotiating agreements, and enforcing contracts.
The benefits that society receives from investments in education, such as a more productive workforce and a higher overall level of knowledge and skills.
The benefits that society receives from investments in healthcare, such as improved public health, reduced healthcare costs, and increased productivity.
The benefits that society receives from technological advancements, such as increased productivity, improved communication, and enhanced quality of life.
The costs that society incurs from pollution, such as health problems, environmental degradation, and reduced quality of life.
The costs that society incurs from traffic congestion, such as increased travel time, fuel consumption, and air pollution.
The costs that society incurs from smoking, such as healthcare expenses, lost productivity, and negative health effects on both smokers and non-smokers.
The costs that society incurs from industrial pollution, such as air and water pollution, ecosystem damage, and negative health effects on nearby communities.
The costs that society incurs from noise pollution, such as sleep disturbances, hearing loss, and reduced quality of life in affected areas.
The costs that society incurs from deforestation, such as loss of biodiversity, increased greenhouse gas emissions, and reduced availability of natural resources.
The costs that society incurs from exposure to secondhand smoke, such as increased risk of respiratory diseases, heart disease, and lung cancer.
The costs that society incurs from excessive alcohol consumption, such as healthcare expenses, traffic accidents, and social problems.
The costs that society incurs from excessive consumption of fast food, such as increased risk of obesity, diabetes, and other health problems.
The failure of markets to allocate resources efficiently in the presence of externalities, leading to suboptimal outcomes for society as a whole.
The actions taken by the government to address market failures caused by externalities and promote efficient resource allocation.
The process of incorporating the costs of carbon emissions into the prices of goods and services through mechanisms such as carbon taxes or cap-and-trade systems.
The process of providing subsidies to encourage activities that generate positive externalities, such as investments in education, healthcare, or renewable energy.
The proposition that if property rights are well-defined and transaction costs are low, private bargaining can result in an efficient solution to externalities, regardless of the initial allocation of property rights.
Taxes imposed on goods or activities that generate negative externalities, with the aim of internalizing the costs and reducing the quantity consumed or produced.
The phenomenon where individuals, acting in their own self-interest, deplete or degrade a shared resource due to the absence of property rights or regulations.
Goods that are non-excludable and non-rivalrous, leading to underprovision in the absence of government intervention due to the free-rider problem.
Goods that are non-excludable but rivalrous, leading to overuse or depletion in the absence of government intervention due to the tragedy of the commons.
Efficiency occurs when the marginal social cost equals the marginal social benefit, while deadweight loss represents the loss of economic efficiency due to market distortions caused by externalities.