ECON-101 Lecture Notes - Lecture 14: Externality, Influenza Vaccine, Cost Curve

17 views3 pages

Document Summary

Externalities: the impact of your action, unintentionally on another person. How can the government discourage negative externalities: impose taxes. Smc (social marginal costs) = pmc + ec. When dealing with negative externalities, have to take into account not only marginal costs but also external costs. Dwl arises because of the market in this case. If government imposes a tax they will reduce or resolve dwl by curving smoking and pollution. Therefore in these situations, taxes reduce dwl rather than produce them. How can the government encourage positive externalities: subsidies. Pmb = private marginal benefit (ex to decide whether to get flu shot compare pmb with mc) Smb (social marginal benefits) = pmb + eb (external benefits, aka. Without subsidy there would be a dwl, if government gives a subsidy, dwl would decrease. Policies: market based: does not tell you what to do, but you get taxed if you do it, command and control: tells you what to do.

Get access

Grade+20% off
$8 USD/m$10 USD/m
Billed $96 USD annually
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
40 Verified Answers
Class+
$8 USD/m
Billed $96 USD annually
Class+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
30 Verified Answers

Related Documents

Related Questions