Government - created from Mind Map

Externality spillover Neighborhood effects Private Bargaining and Negotiation Injunction Liability Law Public Goods (social or collective goods) Coase Theorem Non-rival Consumption Non excludable Free-ride Problem Drop in the bucket problem

Marginal Cost Marginal Social Cost / MSC Marginal Private Cost/ MPC Marginal Damage Cost/MDC Social Optimum point Inneffeciency

The total cost to society of producing an additional unit of good or service. MSC = to the sum of the MC of producing the product and the correctly measured damage costs involved in the process of production

the amount that consumer pays to consume an additional unit of a particular good.

the additional harm done by increasing the level of an externality producing activity by unit 1

it occurs where the Marginal Social benefit equals to the Marginal Social Cost

it occurs where Marginal Benefit equals to the Marginal Private cost

A court order forbidding the continuation of behavior to damages or regulation that stops you from damaging society

Laws that requires A to compensate B for damaging imposed. b owe duty of care to A for damaging imposed

Goods that are nonrival in consumption and/or their benefits are nonexcludable. these goods (nonrival or nonexcludable ) represent a market failure because they have the characteristic that make it difficult for the private sector to produce them profitably. in an unregulated economy with no government, public goods would be the best solution to be produced in insufficient quantity and at worst not produced at all

characteristic of public good: one person's enjoyment of the benefits of a public good does not interfere with another's consumption of it.

it is also the characteristic of public good: once good is produced, no one can be excluded from enjoying its benefits

A problem intrinsic to public goods: because people can enjoy the benefits of public goods whether or not they pay for them, they are usually unwilling to pay for them

Government

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