Externalities and Common Pool/Common Access Resources + Public Goods (T3IB1)
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From Course Notes Vol. 2
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10 Terms
MSB
Marginal Social Benefit
MSC
Marginal Social Cost
MPB. What does the graph [look like/represent]
Marginal Private Benefit. Downward sloping/Demand curve]
MPC. What does the graph [look like/represent]
Marginal Private Cost. Upward sloping/Supply curve
MEB
Marginal External Benefits
MEC
Marginal External Cost
Most government are concerned with what?
Optimizing the use of the country’s limited resources to meet unlimited human wants
Market Failure
Failure of markets to achieve allocative efficiency
Market fail to produce output at which MSB = MSC —> Social Surplus is not maximized
Free market functions based on self-interest. What are these self-interest?
Consumer: Aims to maximize satisfaction
Producer: Aims to maximize profits
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