Econ studying

Carbon tax designed to reduce pollution is an example of what?

Carbon tax designed to reduce pollution is an example of what?

A market based policy

Externality

A benefit or cost experienced by someone who is not a producer or consumer of a good or service

Market failure

The inability of the market to allocate resources efficiently up to the point where marginal social benefit equals marginal cost

Positive externality

the marginal social benefit to exceed the marginal private cost at the market equilibrium

Negative externality

When the private market produces more than the efficient output

Property rights

The rights individuals or firms have to the exclusive use of their property, including the right to buy or sell it

A competitive market achieves economic efficiency by maximizing the sum of consumer surplus and producer surplus

True only if there are no positive or negative externalities in the market

Private solution to externality

The transaction costs to negotiate a solution must be relatively low and the number of bargaining parties must be small

When levels of pollution are high,

The marginal benefit of reducing pollution is also high.

Economically efficient level of pollution

Where marginal cost of pollution reduction equals marginal social benefit

A product is a Rival product if

Your consumption of the product reduces the quantity available for others to consume

A product is Non-excludable if

You cannot keep those who did not pay for the item from enjoying its benefits.

Public goods display these characteristics

nonrivalry and nonexcludability in consumption

Consumer resources differ from public goods because

Unlike public goods, common resources are rival in consumption

Benefits of others receiving a vaccine

Nonrival and nonexcludable

It is difficult for Private markets to provide public goods efficiently because

Individual preferences are not revealed in the market for the good.

In order for a Price ceiling to be binding, it must

Lie at or below the free-market equilibrium price

Marginal cost

Change in total cost divided by change in output

When marginal product is at its maximum in the short run, then marginal cost is at

Its minimum