Click to edit Master title styleCopyright ? 2004 South-WesternClick to edit Master text stylesSecond levelThird levelFourth levelFifth level4 THE ECONOMICS OF THE PUBLIC SECTOR10Externalities Introdu
4 THE ECONOMICS OF THE PUBLIC SECTOR110Externalities 2IntroductionRecall:Adam Smith’s “invisible hand” of the marketplace leads self-interested buyers and sellers in a market to maximize the total ben
Click EXTERNALITIES AND MARKET INEFFICIENCY0The Market for Aluminum For each unit of aluminum produced the social cost includes the private costs of the producers plus the cost to those bystanders adv
Click EXTERNALITIES AND MARKET INEFFICIENCYQuantity ofQMARKETQuantity ofcostNegative Externalities 0QOPTIMUMThe Coase Theorem is a proposition that if private parties can bargain without cost over the
Click Chapter 10When a market oue affects parties other than the buyers and sellers in the market side-effects are created called cause markets to be inefficient and thus fail to maximize total (
Click to edit Master title styleCopyright ? 2004 South-WesternClick to edit Master text stylesSecond levelThird levelFourth levelFifth level4 THE ECONOMICS OF THE PUBLIC SECTOR10Externalities Recall:
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