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Externality Efficient
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In the absence of market failures, the competitive market outcome maximizes total surplus. A type of market failure.
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Negative Externality Externality
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The uncompensated impact of one person’s actions on a buyer. The effect on bystanders is adverse.
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Self-interested Buyers and Sellers Positive Externality
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The effect on bystanders is beneficial. Neglect the external effects of their actions so market outcome is not efficient.
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Tax More
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The firm does not bear the full cost of its production, and so will produce ____ than socially efficient Q. How government can improve market outcome for negative externalities.
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Low Lower crime rates and Better government
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How a more educated population benefits society: The market equilibrium quantity of education is too ____.
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Private Cost Subsidies
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How government can improve market outcome for positive externalities. The costs directly incurred by sellers, shown by the supply curve.
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Market Equilibrium Private Value
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This note was uploaded on 08/30/2011 for the course ECO 2023 taught by Professor Underwood-caputo during the Fall '08 term at University of Central Florida.

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Exam2 - Flashcards2 - The flashcards are formatted for...

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