Chapter 11: Greed, Competition and Externalities

Situations where competition, despite existing, doesn't control greed because of insufficient independent sources of greed.

Negative externalities, like pollution, that harm others.

Positive externalities, like education, benefiting others.

A cost imposed on others by an individual or firm's actions.

A market structure with many firms, identical products, and easy entry/exit.

The impact of one person's actions on the well-being of others.

Resources being used in ways that maximize overall benefit to society.

A resource provided by nature, unavailable for private ownership in many cases (e.g air, water, space).

A state where supply and demand balance out, resulting in a particular price and quantity.

The cost of a decision that affects others beyond the decision-maker's immediate cost.

Scenario where consumers directly control the natural resources, leading to a specific market outcome.

The cost directly borne by the producer of each additional unit produced.

The total cost of producing an additional unit to society, which includes both private costs and external costs.

The quantity where the marginal social benefit matches the marginal social cost.

The quantity produced when firms operate under conditions of perfect competition, which might not align with social efficiency.

Alternative approach where the government controls natural resources, potentially leading to a different market outcome.

A government acts as a representative of all citizens, aiming to balance individual interests with the public good.

Costs imposed on others by a person or company's actions (e.g., pollution).

Total costs of an activity, including both private costs and external costs.

The level of production where marginal social benefit equals marginal social cost.

Perfect competition will not efficiently manage resources when there are negative externalities (e.g., pollution).

A tax levied on each unit of a good or service.

The total cost (private and external) of producing one more unit of good or service.

The cost only to the producer of producing one more unit of a good or service.

When one party takes on more risk because they know another party will bear some of the consequences.

A situation where one party taking more risk ( or one party with worse quality products) makes it more difficult to identify high-quality choices for the other party.