ECON 200 Lecture Notes - Lecture 5: Demand Curve, Economic Surplus, Beekeeping
6 Mar 2016
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Externality: a cost or benefit imposed without compensation on someone other than the person who caused it: ex: global warming. Production externalities: negative ones are global warming and air pollution, positive ones are fable of the bees (beekeeping & apple growing-apples get pollinated from the raising of bees and growing the apples helps out the bee keepers) Agglomeration economies: firms in the same industry often locate near one another: the benefits that firms obtain by locating near each other, sources of agglomeration economies: intellectual spill overs (technology and silicon valley) Chapter 18 theme: when externalities are present, you can"t count on the market reaching efficiency. Total surplus: a measure of the combined benefits that everyone receives from participating in an exchange of goods and services: sum of consumer surplus, producer surplus, and any external costs and benefits. Social cost curve: sum of private and external costs (lies above private cost curve)
