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.
Marginal social cost of pollution Marginal social benefit of pollution Socially optimal quantity of pollution External cost External benefit Negative externalities Positive externalities Coase theorem Transaction costs Internalize the externality Environmental standards Emissions Tax Pigouvian tax Tradable emissions permit Pigouvian subsidy Technology spillover Excludable Rival in consumption Private good Nonexcludable Nonrival in consumption Freerider problem Public Good CostBenefit Analysis | referring to a good, describes the case in which the supplier can prevent those who do not pay from consuming the good an uncompensated cost that an individual or firm imposes on others; also known as negative externalities. the proposition that even in the presence of externalities an economy can always reach an efficient solution as long as transaction costs are sufficiently low. when individuals take into account external costs and external benefits. referring to a good, describes the case in which the same unit can be consumed by more than one person at the same time the problem that results when individuals have no incentive to pay for their own consumption of a good, they will take a “free ride” on anyone who does pay; a problem with goods that are nonexcludable. rules established by a government to protect the environment by specifying actions by producers and consumers an external benefit that results when knowledge spreads among individuals and firms the additional cost imposed on society as a whole by an additional unit of pollution referring to a good, describes the case in which the supplier cannot prevent those who do not pay from consuming the good a tax that depends on the amount of pollution a firm produces external costs. the additional gain to society as a whole from an additional unit of pollution the quantity of pollution that society would choose if all the costs and benefits of pollution were fully accounted for a payment designed to encourage activities that yield external benefits a good that is both excludable and rival in consumption. a benefit that an individual or firm confers on others without receiving compensation taxes designed to reduce external costs the expenses of negotiating and executing a deal the estimation and comparison of the social costs and social benefits of providing a public good licenses to emit limited quantities of pollutants that can be bought and sold by polluters external benefits. a good that is both nonexcludable and nonrival in consumption. referring to a good, describes the case in which one unit cannot be consumed by more than one person at the same time |
Marginal social cost of pollution, p. 276
Marginal social benefit of pollution, p. 276
Socially optimal quantity of pollution, p. 276
External cost, p. 278
External benefit, p. 278
Externalities, p. 278
Negative externalities, p. 278
Positive externalities, p. 278
Coase theorem, p. 280
Transaction costs, p. 280
Internalize the externality, p. 280
Environmental standards, p. 282
Emissions tax, p. 282
Pigouvian tax, p. 284
Tradable emissions permits, p. 285
Pigouvian subsidy, p. 289
Technology spillover, p. 289
Excludable, p. 291
Rival in consumption, p. 291
Private good, p. 291
Nonexcludable, p. 291
Nonrival in consumption, p. 292
Free-rider problem, p. 292
Public good, p. 293
Cost-benefit analysis, p. 297