1
Q
Consumption externalities
A
When the social cost/benefits exceed the private costs/benefits.
If social benefits exceed private benefits then it is a positive consumption externality
If social costs exceed private costs it is negative
2
Q
Externality/spillover effect
A
The difference between private and social costs/benefits.
3
Q
Marginal Social costs/ benefits
A
Societies costs and benefits from an additional unit
4
Q
Marginal private cost/benefit
A
the private costs and benefits from an additional unit
5
Q
Production externalities
A
When social costs of production are different to private costs.
MSC > MPC = Negative
MPC > MSC = Positive
6
Q
Social cost / benefit
A
The cost / benefit to the whole of society
Micro Economics
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