In economics, external costs are most accurately described as:
Pearson Edexcel IGCSE · Economics
外部效應:練習題
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Which formula correctly represents the relationship between social benefits, private benefits, and external benefits?
In a market for a merit good with external benefits, the current market equilibrium results in a quantity of \( Q_1 \). To reach the socially optimum level of consumption, which of the following must occur?
In a diagram representing the external costs of production, the vertical distance between the Marginal Social Cost (MSC) curve and the Marginal Private Cost (MPC) curve represents the:
In a market where external benefits of consumption exist (such as healthcare), why is this considered an example of market failure?
Economic activities often create positive or negative impacts on third parties who are not involved in the transaction.
(a) Calculate the social benefit if the private benefit of a medical vaccination is estimated at \( \$25 \) and the external benefit to the wider community is \( \$15 \).
(b) Explain, with the aid of a marginal social benefit (MSB) and marginal private benefit (MPB) diagram, why a merit good such as education is likely to be under-consumed in a free market.
(c) Evaluate how the use of a subsidy can be used by a government to reach the socially optimum level of consumption, and identify one potential disadvantage of this policy.
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