Economics 1021A/B Chapter Notes - Chapter 16: Deadweight Loss, Economic Equilibrium, Avoidance Speech

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ECON 1021A/B Full Course Notes
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ECON 1021A/B Full Course Notes
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Externality: a cost or a benefit that arises from: production and falls on someone other than the producer, consumption and falls on someone other than the consumer. Negative externality: an externality that imposes a cost: of production: Pollution of air, water, and land: of consumption: Positive externality: an externality that imposes a benefit: of production: Private cost (of production) : a cost that is borne by the producer of a good or service. Marginal private cost (mc): the cost of producing an additional unit of a good or service that is borne by the producer of the good or service. External cost: the cost producing a good or service that falls on the people other than the producer. Marginal external cost: the cost of producing an additional unit of a good or service that falls on the people other than the producer. Marginal social cost (msc): the marginal cost incurred by the producer and everybody else whom the cost falls.

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