ECON 1000 Final: ECON 1000 CH 16 EXTERNALITIES

• School: York University
• Department: Economics
• Course: ECON 1000
• Professor: Ardeshir Noordeh

Document Summary

An externality: is a cost or benefit that arises from production and falls on someone other than the person or the firm choosing the action. Positive consumption externalities: negative production externalities. Burning coal to generate electricity emits carbon dioxide. Other examples are noise from aircraft and trucks, pollution of rivers and lakes, and air pollution in major cities from auto exhaust. When bees collect honey they also pollinate flowers = production creates related benefits: negative consumption externalities. Negative consumption externalities are a common part of everyday life. Smoking tobacco in a confined space poses a health risk to others: positive consumption externalities. When you get a flu vaccination, everyone you come into contact with benefits. A private cost of production: is a cost that is borne by the producer of a good or service. Marginal private cost (mc) is the private cost of producing one more unit of a good or service.