8 min read
This study guide covers externalities in microeconomics, including negative externalities (e.g., pollution) and positive externalities (e.g., vaccinations). It explains marginal social cost (MSC), marginal private cost (MPC), marginal social benefit (MSB), and marginal private benefit (MPB). It also discusses how Pigouvian taxes and subsidies can address externalities and includes graph analysis, practice questions, and exam tips.
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Question 1 of 12
An externality occurs when an economic activity has a side effect that impacts: 🧐
Only the buyer and seller involved in the transaction
Only the government
Someone not involved in the original transaction
Only the producers