Positive externalities of innovation
    Key points If inventors received a greater share of the broader social benefits for their work, they would have a greater incentive to seek out new inventions. Positive externalities are beneficial spillovers to a third party or parties. Private benefits are the dollar value of all benefits of a new product or process invented by a company that can be captured by the investing company. Social benefits are the dollar value of all benefits of a new...
    By Mark Lorenzo 2023-07-31 20:03:47 0 1885
    The tradeoff between economic output and environmental protection
    Key points Depending on their income levels and political preferences, different countries are likely to make different choices about how to balance economic output and environmental protection. All countries benefit from making a choice that is productively efficient—that is, a choice somewhere on the production possibility frontier rather than inside it. The tradeoff between economic output and environmental protection Unfortunately, it's not...
    By Mark Lorenzo 2023-07-28 20:15:43 0 1606
    International environmental issues
    Key points Certain global environmental issues, such as global warming and biodiversity, spill over national borders and will need to be addressed with some form of international agreement. Biodiversity is the spectrum of animal and plant genetic material. International externalities are externalities that cross national borders and that cannot be resolved by a single nation acting alone. An international perspective on environmental issues...
    By Mark Lorenzo 2023-07-27 15:52:57 0 112
    The benefits and costs of US environmental laws
    Key points Taken as a whole, the benefits of US environmental regulation have outweighed the costs. As the extent of environmental regulation increases, additional expenditures on environmental protection will probably have increasing marginal costs and decreasing marginal benefits. This pattern suggests that the flexibility and cost savings of market-oriented environmental policies will become more important. Introduction Government economists...
    By Mark Lorenzo 2023-07-26 20:06:55 0 153
    Types of market-oriented environmental tools
    Key points The three main categories of market-oriented environmental policies are pollution charges, marketable permits, and better-defined property rights. A marketable permit program is a program in which a city or state government issues permits allowing only a certain quantity of pollution. These permits to pollute can be sold or given to firms free. A pollution charge is a tax imposed on the quantity of pollution that a firm emits....
    By Mark Lorenzo 2023-07-25 19:23:33 0 145
    What are market-oriented environmental tools?
    Key points The three main categories of market-oriented environmental policies are pollution charges, marketable permits, and better-defined property rights. The advantage of market-oriented environmental tools is that, because of their incentives and flexibility, they can achieve any desired reduction in pollution at a lower cost to society than command-and-control regulation. Market-oriented environmental tools Market-oriented environmental policies...
    By Mark Lorenzo 2023-07-24 17:50:01 0 116
    Command-and-control regulation
    Key points Command-and-control regulation sets specific limits for pollution emissions and/or mandates that specific pollution-control technologies that must be used. Although such regulations have helped to protect the environment, they have three shortcomings: they provide no incentive for going beyond the limits they set; they offer limited flexibility on where and how to reduce pollution; and they often have politically-motivated loopholes....
    By Mark Lorenzo 2023-07-21 19:23:46 0 148
    The economics of pollution
    Key Points Economic production can cause environmental damage. This tradeoff arises for all countries, whether high-income or low-income, and whether their economies are market-oriented or command-oriented. An externality, sometimes called a spillover, occurs when an exchange between a buyer and seller has an impact on a third party who is not part of the exchange. Externalities can be positive or negative. Market failure is when the market does not...
    By Mark Lorenzo 2023-07-20 18:29:02 0 109
    How perfectly competitive firms make output decisions
    Key points As a perfectly competitive firm produces a greater quantity of output, its total revenue steadily increases at a constant rate determined by the given market price. Profits will be highest—or losses will be smallest—for a perfectly competitive firm at the quantity of output where total revenues exceed total costs by the greatest amount, or where total revenues fall short of total costs by the smallest amount. How perfectly...
    By Mark Lorenzo 2023-07-19 22:25:39 0 147
    Perfect competition and why it matters
    Key points A perfectly competitive firm is a price taker, which means that it must accept the equilibrium price at which it sells goods. If a perfectly competitive firm attempts to charge even a tiny amount more than the market price, it will be unable to make any sales. Perfect competition occurs when there are many sellers, there is easy entry and exiting of firms, products are identical from one seller to another, and sellers are price takers....
    By Mark Lorenzo 2023-07-18 20:28:25 0 184
    Explicit and implicit costs and accounting and economic profit
    Key points Privately owned firms are motivated to earn profits. Profit is the difference between revenues and costs. Private enterprise is the ownership of businesses by private individuals. Production is the process of combining inputs to produce outputs, ideally of a value greater than the value of the inputs. Revenue is income from selling a firm’s product; defined as price times quantity sold. Accounting profit is the total...
    By Mark Lorenzo 2023-07-17 19:32:29 0 116
    The structure of costs in the long run
    Key points A production technology is the specific combination of labor, physical capital, and technology that makes up a particular method of production. In the long run, firms can choose their production technology, so all costs become variable costs. Economies of scale refers to a situation where the average cost decreases as the level of output increases. The structure of costs in the long run Generally speaking, the long run...
    By Mark Lorenzo 2023-07-14 18:27:19 0 125
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