ECONOM 1051 Chapter 5: Chapter 5.docx

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2 Mar 2014
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You benefit from the flowers, but every passerby walking by does too: positive externality benefits all (garden, private benefit benefit to you of producing a good or service (problem exists when social benefit is greater than private, because you lose the incentive to produce, social benefit benefit to society of producing a good or service, negative externality costs all (sharing an apartment with other people and not picking up your shit, private cost cost borne by the producer of a good or service, social cost total cost of producing (both private and external costs) Remember this because companies produce a certain amount of good in gas spewing factories without considering the pollution they"re really making more than they should: positive externalities tendency for market to underproduce this good (you go to school for your own private benefit; if you took the social benefit of you going to school in effect, then you"d go for way longer.

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