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ECON201--Externalities

ECON201--Externalities - Externalities Econ 201 Notes...

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Externalities: Econ 201 Notes - Marginal Social cost of pollution: the additional cost imposed to society as a whole by an additional unit of pollution. o Ex. Acid rain damages fisheries, crops, and forests, and each additional ton of sulfur dioxide released into the atmosphere increase the damage. - Marginal social benefit of pollution: the additional gain to society from an additional unit of pollution. o Ex. To reduce the quantity of sulfur dioxide they emit, power companies muster either buy expensive low-sulfur coal or install specials scrubbers to remove sulfur from their emissions. - Socially optimal quantity of pollution: the quantity of pollution society would choose if all its costs and benefits were fully account for. - External Cost: an uncompensated cost that an individual or firm imposes on others. o EX. Pollution, traffic congestion - External Benefits : a benefit that an individual or firm confers on others without receiving compensation - Externalities : External costs and benefits o
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