4.3 Calculating Costs in a Regulatory Context.pdf - Calculating Costs in a Regulatory Context Estimating Costs Estimating Costs Theoretically Measure of

4.3 Calculating Costs in a Regulatory Context.pdf -...

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Calculating Costs in a Regulatory Context Estimating Costs Estimating Costs
Theoretically Measure of Social Costs For a single market, the theoretically correct measure of economic costs is the loss in consumer and producer surplus In the case of a supply increase Consumer surplus unequivocally declines The effect on producer surplus is ambiguous (generally) The social cost and its allocation depend on the elasticity of supply and demand Estimating Costs
Example of Calculating the Loss in Surplus Estimating Costs
One market vs. multiple markets If the costs occur in one market but the benefits to another, then they may need to be analyzed separately. Estimating Costs
Analyzing Net Benefits in One Market with Abatement If the costs and benefits of an action occur in the same market, then they can be analyzed with one graph.

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