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Micro Ch 12
Stack based on Chapter 12 of Principles of Microeconomics 3e
| Term | Definition |
|---|---|
| additional external cost | additional costs incurred by third parties outside the production process when a unit of output is produced |
| command-and-control regulation | laws that specify allowable quantities of pollution and that also may detail which pollution-control technologies one must use |
| externality | a market exchange that affects a third party who is outside or “external” to the exchange; sometimes called a “spillover” |
| market failure | when the market on its own does not allocate resources efficiently in a way that balances social costs and benefits; externalities are one example of a market failure |
| marketable permit program | a permit that allows a firm to emit a certain amount of pollution; firms with more permits than pollution can sell the remaining permits to other firms |
| negative externality | a situation where a third party, outside the transaction, suffers from a market transaction by others |
| positive externality | a situation where a third party, outside the transaction, benefits from a market transaction by others |
| property rights | the legal rights of ownership on which others are not allowed to infringe without paying compensation |
| social costs | costs that include both the private costs incurred by firms and also additional costs incurred by third parties outside the production process, like costs of pollution |
Created by:
CheriseSLCC
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