Negative externalities and market failure, problems of estimating the value of externalities

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  • Created by: Jade
  • Created on: 10-01-13 12:33
A negative externality leads to ?
A divergence between private costs and social costs
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In order for there to be a more efficient allocation of resources, what needs to happen?
Reduce supply, increases price, reduces quantity supplied and demanded
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Negative externality result in market failure because the good/service is ?
Overproduced and underpriced
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The price consumers pay does not take ________ into account.
External costs
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To correct market failure with negative externalities - (on a diagram) allocative efficiency will be achieved at?
p1 and q1
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The most comprehensive estimates of the social costs of road transport was made by?
Adam Smith Institute in 1999
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Within this comprehensive study, it was estimated that congestion costs how much (£bn)?
18
7 of 11
However, in this comprehensive study, during congested conditions - vehicles emit more pollutants per kilometre. Estimated social cost at this times is what?
40p per km for cars, over 80p for diesel fueled HGVs
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In 1999, the average taxation for road users was estimated at ?
5.4p per vehicle km
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Using current government methods, the present cost of congestion is around £25bn based on?
The value of time that is lost when road users are stuck in traffic
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Indirect tax, regulation, subsidies to encourage greater use of public transport, information provision are all polices to?
Correct negative externalities
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Other cards in this set

Card 2

Front

In order for there to be a more efficient allocation of resources, what needs to happen?

Back

Reduce supply, increases price, reduces quantity supplied and demanded

Card 3

Front

Negative externality result in market failure because the good/service is ?

Back

Preview of the front of card 3

Card 4

Front

The price consumers pay does not take ________ into account.

Back

Preview of the front of card 4

Card 5

Front

To correct market failure with negative externalities - (on a diagram) allocative efficiency will be achieved at?

Back

Preview of the front of card 5
View more cards

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