EXTERNALITIES.

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19 Terms

1

Externalities

Costs or benefits resulting from activities of economic units (firms or consumers) but for which no compensation is made.

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2

Spill over

The effect that one situation or problem has on another situation.

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3

Private cost

The cost of an activity paid for by the individuals, a firm, an area or a country that engages in that particular activity.

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4

Social cost

Costs suffered by society as a whole due to the actions of one party.

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5

Negative externality

An action or event that causes harm or adverse side effects to be felt by others.

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6

Private benefits

Benefits received by individuals, firms, areas or countries from engaging in a particular activity.

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7

Social benefits

Benefits or gains to society as a whole resulting from production activities.

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8

Subsidy

A financial grant given by the government to businesses to reduce the cost of production.

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9

Fine

A compulsory payment intended to punish or deter certain behaviors or activities.

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10

Pollution permit

A government document issued to businesses allowing them to discharge a certain quantity of polluted material into the environment.

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11

Taxation

A compulsory fee paid by individuals or businesses to the government.

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12

Government Regulation

Laws imposed by the government to reduce negative externalities.

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13

External cost

Costs that arise due to negative externalities affecting third parties.

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14

Positive externality

A benefit that affects a third party positively as a result of an economic activity.

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15

Elastic demand

A situation where demand for a product changes significantly with a change in price.

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16

Opportunity cost

The loss of potential gain from other alternatives when one alternative is chosen.

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17

Monopoly

A market structure where a single seller controls the entire supply of a product or service.

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18

Misleading advertisements

Promotional content that deceives consumers about the true nature of a product.

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19

Job opportunities

Positions available for employment that provide income and benefits to individuals.

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