To what extent are externalities acceptable?

HideShow resource information
What are positive externalities?
Are external benefits that are experienced by third parties but paid for by someone else.
1 of 7
What are negative externalities?
Are external costs that have a detrimental effect on the lives of people who didn't buy or sell the product or service.
2 of 7
What is cost benefit analysis?
Attempts to calculate the potential costs and benefits of a project. If benefits outweigh costs the projects goes ahead or vice versa.
3 of 7
What is marginal social cost?
The change in the total social cost to society as a whole when producing one additional unit or taking one further action, in an economy.
4 of 7
What is marginal social benefit?
The change in the total social benefit to society as a whole when producing one additional unit, or taking one further action, in an economy.
5 of 7
What are the limitations of using cost benefit analysis?
Some costs and benefits are very difficult to measure in monetary values, costs easier to estimate, difficult to determine future&indirect costs, time consuming&expensive, usually doesn't consider how costs&benefits are spread across society.
6 of 7
What are the benefits of cost benefit anlaysis?
Compares costs&benefits in monetary terms, clear indication of cost&benefits, simplifies complex concepts or processes, more accepted by society than other economic methods, can be done on many levels eg local, regional ,national.
7 of 7

Other cards in this set

Card 2

Front

What are negative externalities?

Back

Are external costs that have a detrimental effect on the lives of people who didn't buy or sell the product or service.

Card 3

Front

What is cost benefit analysis?

Back

Preview of the front of card 3

Card 4

Front

What is marginal social cost?

Back

Preview of the front of card 4

Card 5

Front

What is marginal social benefit?

Back

Preview of the front of card 5
View more cards

Comments

No comments have yet been made

Similar Business Studies & Economics resources:

See all Business Studies & Economics resources »See all To what extent are externalities acceptable? resources »