Economics 1021A/B Lecture Notes - Coase Theorem, Economic Equilibrium, Cost

• School: Western University
• Department: Economics
• Course: Economics 1021A/B
• Professor: Emilie Rivers

Document Summary

Externality: cost or a benefit that arises from production and falls on someone other than the producer, cost or benefit that arises from consumption and falls on someone other than the consumer. Negative externality externality that imposes a cost. Positive externality externality that provides a benefit. Congestion traffic, burning additional fuel, every rush-hour diver imposes a cost on the other drivers. Pollution and carbon emission increasing carbon footprint: air pollution road transportation and industrial process, water pollution dumping of industrial waste, land pollution dumping toxic waste products. Two things that benefit each other when they work together. Private cost cost that is borne by the producer of a good or service. Marginal cost cost of producing an additional unit of a good or service. Marginal private cost (mc) cost of producing an additional unit of a good or service that is borne by its producer.