Externalities Flashcards
(18 cards)
A negative externalities
A cost borne by a 3rd party who was not involved in the production or consumption of a good
Negative production graph
MPB and MSB is one curve that follows tge demand curve shape
MSC is above MPC
The triangle is deadweight welfare loss (area of over consumption)
Marginal social cost
As the overall costs to society of consumers owning a damaging product
Marginal social benefit
Is the overall benefit to society of consumers owning a product such as a car
Remedies
Taxing polls such as carbon taxes
Subsidising household of firms to be non-pollutors e.g. solar panels
Selling permits to pollute which may become traded by the polluters
Forcing polluters to pay compensation to those who suffer
Roads pricing schemes London has a congestion charge of £15.
Provide more info to consumers and adjusters.
The adoption of policies emerging from research by behavioural economists
Private course of owning a car
Insurance
Purchase price
Road tax
License
Fuel
Social cost of car ownership
CO2 emissions
Congestion
Accidents equal NHS
Negative externalities consumption graph
MSC act as a supply curve MPB as above MSB
Triangle is dead weight loss of social welfare
Positive externality production
MPB and MSB at as demand curve
MPC as above MSC
Shaded area represents the welfare loss from underproduction or under provision
Positive consumption
MPC and MSC act as a supply curve
MSB as above MPB
Triangle equals dead weight loss of social welfare
When does positive consumption externality occur?
When consuming a good causes a positive externality to a third-party. This means the social benefits of consumption exceed the private benefits.
Economic impact of climate change GDP
Temperature rises to 2°C the global GDP will fall 15%
Impact of climate change employment
Effect‘s 1 .2 billion jobs
The industries most at risk or agriculture fisheries and forestry
Climate change on immigration
Immigration change creates mass migration around the world as people leave natural disaster areas
Climate change on prices
Food places are rising as crops and soybean yields are affected
Insurance on climate change
Would have to rise to premium to cover rising coast of extreme weather
Productivity on climate change
Agriculture productivity well breakdown
Economic costs to climate change
A once fertile agricultural area experiences, hot weather and drought causing its crop yield to decrease
I wrote destroyed by flooding caused by rising Sea must be built
An electrical utilities spends hundreds of millions of pounds to build more efficient power grid because the old one could not stand extreme weather
