To what extent are externalities acceptable?

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Created by: apple87
Created on: 19-10-15 19:03

What are positive externalities?

Are external benefits that are experienced by third parties but paid for by someone else.

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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.

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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.

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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.

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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.

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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.

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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.

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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

Card 4

Front

What is marginal social cost?

Back

Card 5

Front

What is marginal social benefit?

Back

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To what extent are externalities acceptable?