ch 3 Flashcards
(17 cards)
p=
maximum price buyers are willing to pay
the sum of the individual demands—for each price. This is sometimes called a “horizontal sum” because the summation is over the quantities for each price.
horizontal summation
opportunity cost of using the firms own resources
implicit costs
expenses
explicit costs
cost of pollution to society
external cost
borne by the producer
private cost
the private cost+any other cost to society
social cost
the cost of producing one more unit of that good
marginal cost (mc)
mwtp=
mc
any costs taken in by society but firm doesn’t care
externalities
reasons for market failure
reasons for market failure
- externalities
- common acess resourses
- public goods
mc incurred by the firm
marginal private cost (mpc)
the additional external cost of producing one more unit
marginal external cost (MEC)(pollution)
MEC+mpc=
msc
q=
good
q*=
quantity
p*=
optimal output/ equilibrium
