L28 - Economics 101:Principles of Microeconomics Professor...

Info iconThis preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon
1 Economics 101:Principles of  Microeconomics Professor Jo Hertel Lecture 28: Review Final room assignments on the exam page. Calculators allowed, no books, no notes. Please note that there will be nothing on financial markets on the final (despite the wrong slides being posted briefly for Tuesday)
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2 Negative externality: costs to bystanders (MEC > 0) Always: Marginal social X = Marginal private X (+ Marginal external X) q $ MPC MPB q $ MPC MPB Positive externality: benefits to bystanders (MEB > 0) MSC =MSB =MSC MSB
Background image of page 2
3 Negative externality: Always: q market sets MPC = MPB (maximizes private gain!) q opt sets MSC = MSB (maximizes social gain!) q $ MPC MPB q $ MPC MPB Positive externality: MSC =MSB =MSC MSB q opt q market q opt q market
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
4 Dealing with negative externalities Private solutions: If bystanders pay MEC per unit of reduction, MPC=MSC. Government intervention:
Background image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/01/2008 for the course ECON 101 taught by Professor Hansen during the Fall '07 term at Wisconsin.

Page1 / 17

L28 - Economics 101:Principles of Microeconomics Professor...

This preview shows document pages 1 - 5. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online