Externalities in Production and Consumption (AQA A-Level Economics): Flashcards

Difference between private and social costs or benefits

Social cost exceeds private cost

Social benefit exceeds private benefit

People benefit from a good without paying for it

$\text{MSC} = \text{MPC} + \text{MEC}$

$\text{MSB} = \text{MPB} + \text{MEB}$

Over-production and over-consumption

Under-production and under-consumption

$P = \text{MSC}$

Over-exploitation of resources when property rights absent