Negative externalities

What is a Negative Externalities

when production and/or consumption impose external costs on third parties outside the market for which no appropriate compensation is paid

Give an example of a negative production externality associated with industries.

Air pollution from factories.

What is an example of a negative consumption externality involving waste management?

Fly-tipping of house waste.

What does MSC stand for and what does it represent?

Marginal Social Cost; it represents the total cost to society of producing one more unit of a good.

What does MPC stand for and what does it include?

Marginal Private Cost; it includes the cost to a producer for producing one more unit of a good, excluding external costs.

What is MPB and what does it signify?

Marginal Private Benefit; it signifies the benefit received by a consumer for consuming one more unit of a good, excluding external benefits.

What does MSB represent?

Marginal Social Benefit; it represents the total benefit to society from consuming one more unit of a good.

What is meant by social welfare loss in economic terms?

It occurs when the market output supplied is higher than the social optimum.

List an example of a negative consumption externality linked to health issues.

Alcohol addiction.

Which type of pollution is associated with vehicle emissions?

Negative consumption externality.