Everything you need to know about EXTERNALITIES- Micro Unit 6
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Your teacher of professors is
Your teacher of professors is going to ask you to draw externalities, including the socially optimal quantity and deadweight loss. The might even require you to draw both types: a consumption externality and a production externality.
Here are three rules that will help you.
1. Consumption externalities always have two benefit curves (MSB and MPB). Production externalities have two cost curves (MSC and MPC).
2. Negative externalities always produce too much and positive externalities always produce too little.
3. Deadweight loss points left for negative externalities and right for positive externalities.
Need more help? Check out my Ultimate Review Packet:
https://www.ultimatereviewpacket.com/...
Here are three rules that will help you.
1. Consumption externalities always have two benefit curves (MSB and MPB). Production externalities have two cost curves (MSC and MPC).
2. Negative externalities always produce too much and positive externalities always produce too little.
3. Deadweight loss points left for negative externalities and right for positive externalities.
Need more help? Check out my Ultimate Review Packet:
https://www.ultimatereviewpacket.com/...
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