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Unformatted text preview: Explicit 3 + implicit 1 (opportunity cost of the wait) negative externality 1.25 (halitosis)= $5.25 • Transaction has two parties • You and seller, you and your mom • Externalities – legal studies • Neighbor effects – synonyms however (look below) Pigou • Not all externalities are negative – third parties are made better off (positive externalities) • Negative extra in consumptions – consume something and makes other people worse off • Internalizing the externality of his consumption decision...
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This note was uploaded on 01/19/2011 for the course ECON 2005 taught by Professor Zirkle during the Fall '07 term at Virginia Tech.
- Fall '07