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Essay

ECON 101: Negative Externality

Essay specific features

 

Issue:

Biographies

 

Written by:

Carole M

 

Date added:

June 18, 2014

 

Level:

University

 

Grade:

A

 

No of pages / words:

2 / 498

 

Was viewed:

10388 times

 

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Essay content:

Producer surplus is equivalent to profit without the fixed cost (e.g., monthly lease payments that don't change with output). Unfortunately, production of Q generates some harmful side (i.e., external) effects such as fewer healthy days, fewer recreation opportunities, etc: marginal external cost = MEC...
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If these costs are constant then the full costs to society of production of Q is the marginal social cost curve: MSC = MPC + MEC. The external costs of Q1 are equal to area c + d + e + f + g + h. (Nothing in the conclusions changes if the MEC is increasing in Q0. Environmental regulation is designed to get firms to "internalize the externality" by considering the external costs of production...
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