Course review
Review each learning objective in this topic, then open its concept explanation or question set.
Learning objective
• Social optimum occurs where marginal social benefit equals marginal social cost • Allocative efficiency maximizes social or community surplus • Diagram: allocative efficiency
Start with the concept explanation, then practise to create mastery evidence.
Learning objective
• Positive externalities of production or consumption create under-allocation without intervention • Negative externalities of production or consumption create over-allocation without intervention • Merit goods and demerit goods are linked to positive and negative externality cases • Diagram: market failure from negative production, negative consumption, positive production, and positive consumption externalities
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Learning objective
• Calculate welfare loss from an externality diagram
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Learning objective
• Common pool resources are rivalrous but non-excludable • The tragedy of the commons can cause unsustainable production and negative externalities
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Learning objective
• Responses include Pigouvian taxes, carbon taxes, regulation, education, tradable permits, international agreements, collective self-governance, subsidies, and government provision • Diagram: government responses to externalities using Pigouvian taxes, carbon taxes, subsidies, legislation, regulation, and education • Diagram: carbon tax effects on a particular polluting industry
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Learning objective
• Evaluation considers measurement challenges, policy effectiveness, and stakeholder consequences • International cooperation matters because sustainability issues are global • Monitoring and enforcement are major challenges in international cooperation
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