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.
externality negative externality positive externality external marginal cost external marginal benefit social cost social benefit efficient level of pollution marginal abatement cost (MAC) Pigouvian tax Pigouvian subsidy quota tradable permit Coase theorem public good nonexcludability nonrival private good common resource club good pure public good total marginal benefit free- tragedy of the commons | The vertical sum of the marginal benefit curves of all of a public good’s consumers. The cost imposed on a third party when an additional unit of a good is produced or consumed. A tax imposed on an activity that creates a negative externality. A good that is both nonrival and nonexcludable. The benefit conferred on a third party when an additional unit of a good is produced or consumed. A government- A subsidy paid for an activity that creates a positive externality. The benefit of an economic transaction to society, equal to the private benefit plus the external benefit. A cost or benefit that affects a third party not directly involved in an economic transaction. The cost of reducing emissions by 1 unit. The dilemma that common resources create: Because everyone has free access, the resource is used more intensively than it would if it were privately owned, leading to a decline in the value of the resource for everyone. A source of inefficiency resulting from individuals consuming a public good or service without paying for it. A good that is accessible to anyone who wants to consume it, and that remains just as valuable to a consumer even as other people consume it. A good that is rival (one person’s consumption affects the ability of another to consume it) and excludable (individuals can be prevented from consuming it). The cost of an economic transaction to society, equal to the private cost plus the external cost. Defining property of a public good that describes how one individual’s consumption of the good does not diminish another consumer’s enjoyment of the same good. A good that is nonrival and excludable. A cost imposed on a third party not directly involved in an economic transaction. A regulation mandating that the production or consumption of a certain quantity of a good or externality be limited (negative externality) or required (positive externality). Theorem that states costless negotiation among market participants will lead to the efficient market outcome regardless of who holds legal property rights. A defining property of a common resource, which means that consumers cannot be prevented from consuming the good. A benefit conferred on a third party not directly involved in an economic transaction. The level of emissions necessary to produce the efficient quantity of the good tied to the externality. A special class of good that is rival but nonexcludable; an economic good whose value to the individual consumer decreases as others use it and that all individuals can access freely. |