Match each of the terms on the left with its definition on the right. Click on the term first and then click on the matching definition. As you match them correctly they will move to the bottom of the activity.
externalities market failure Coase theorem public goods nonrivalry nonexcludability free rider “tragedy of the commons” asymmetric information government failure command and control policies market- Pigouvian tax cost- sustainable development | Resources that are owned by the community at large (e.g., parks, ocean fish, and the atmosphere) therefore tend to be overexploited because individuals have little incentive to use them in a sustainable fashion. A methodology for decision making that looks at the discounted value of the costs and benefits of a given project. When markets fail to provide a socially optimal level of output, and will provide output at too high or low a price. The ability to meet the needs of the present without compromising the ability of future generations to meet their own needs. Environmental policies that use charges, taxes, subsidies, deposit- The impact on third parties of some transaction between others in which the third parties are not involved. An external cost (or negative externality) harms the third parties, whereas external benefits (positive externalities) result in gains to them. Environmental policies that set standards and issue regulations, which are then enforced by the legal and regulatory system. The consumption of a good or service by one person does not reduce the utility of that good or service to others. A tax that is placed on an activity generating negative externalities in order to achieve a socially efficient outcome. The result when the incentives of politicians and government bureaucrats do not align with the public interest. If transaction costs are minimal (near zero), a bargain struck between beneficiaries and victims of externalities will be efficient from a resource allocation perspective. As a result, a socially optimal level of production will be reached. Once a good or service is provided, it is not possible to exclude others from enjoying that good or service. Occurs when one party to a transaction has significantly better information than another party. An individual who avoids paying for a good because he or she cannot be excluded from enjoying the good once provided. Goods whose consumption by one person cannot diminish the benefit to others of consuming the good (i.e., nonrivalry), and once they are provided, no one person can be excluded from consuming (i.e., nonexclusion). |