Economics 2182A/B Lecture Notes - Lecture 13: Autarky, United Center, Externality

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Stadiums and arenas have positive externalities: a benefit that falls on someone other than the producer. The positive externalities of a stadium and/or arena are greater than the negative externalities. Negative externality: a cost that falls on someone other than the producer. They are concerned with the marginal private costs private costs + external costs = social costs. Efficiency = marginal social benefit = marginal benefit. The negative externality results in too many games played. Over time, negative production externalities decrease thereby moving the msc curve right, which will increase the number of games and lower the price of the ticket. All chicago sports teams together earn less than of 1% of all local income. Multiplier = 1/(1-mpc: the more of each additional dollar you spend, the greater will be the multiplier effect, mpc + mps = 1. In the united states, the mpc = 0. 9.

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