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Positive Consumption Externality
Positive spillovers from consumption of good or service.
Positive Production Externality
Positive spillovers from production of good or service.
Total cost to society (Positive Externality)
Total cost to society is less than that to just the producer.
Total benefit to society (Positive Externality)
Total benefit to society is greater than that to just the consumer.
Negative Consumption Externality
Negative spillovers from consumption of good or service.
Negative Production Externality
Negative spillovers from production of good or service.
Total benefit to society (Negative Externality)
Total benefit to society is less than that to just the consumer.
Total cost to society (Negative Externality)
Total cost to society is greater than that to just the producer.
Types of Taxes
Different categories of taxes based on how they affect income.
Regressive Tax
As your income increases, percentage of income paid in taxes decreases.
Proportional Tax
As your income increases, percentage of income paid in taxes stays the same.
Progressive Tax
As your income increases, percentage of income paid in taxes increases.
Lorenz Curve
Curve that shows percentage of a nation's total income for different percentages of a nation's population.
Gini Coefficient
Percentage that the area above the Lorenz curve represents of all the area below the 45Ëš line.
Per-Unit Tax
Per-unit taxes act as a variable cost.
Lump-Sum Tax
Lump-sum taxes act as a fixed cost.
Impact of Per-Unit Tax on MC
Per-unit taxes increase MC, AVC, and ATC for the monopolist.
Impact of Lump-Sum Tax on ATC
Lump-sum taxes increase the ATC (because AFC increases) but not the MC.
Impact of Per-Unit Subsidy on Costs
Per-unit subsidies reduce per-unit costs (think variable costs).
Impact of Lump-Sum Subsidy on Costs
Lump-sum subsidies act as a reduction of fixed costs.
Impact of Per-Unit Subsidy on MC
Per-unit subsidies decrease MC, AVC, and ATC for the monopolist.
Impact of Lump-Sum Subsidy on ATC
Lump-sum subsidies decrease the ATC (because AFC decreases) but not the MC.
Note 
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