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Unformatted text preview: Externalities is Not Zero Quantity of Pollution MC/MB MC (increasing opportunity cost) Q MB = MB MB (diminishing marginal utility) Optimal amount of pollution: MC = MB Chapter 11: Externalities and Property Rights Slide 29 The Problem of Unpriced Resources z When no one owns property (the commons), the opportunity cost of using it is not considered. z Use of the property (the commons) will increase until MB = 0. Property Rights and the Tragedy of Commons Chapter 11: Externalities and Property Rights Slide 30 Property Rights and the Tragedy of Commons One persons use of the commons imposes an external cost on the others by making the property less valuable....
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- Spring '08