What is private and social cost?
Private Cost:Private cost is the cost faced by the producer or consumer directly involved in a transaction.If we take the case of a producer, his private cost includes direct cost of labour, materials, energy and other indirect overheads. In other words firm’s private cost would be the direct cost of production only which does not incorporate externalities as firms do not have to pay for the damage resulting from the pollution which they generate.If we take the case of consumer, these are the costs that we actually have to pay .Extra Knowledge:Let us take the example of owning and driving a car. If I own and drive a car, I have to buy the car. Then I have to pay for the gas I use. I have to maintain the car. I have to buy insurance. These are all private costs because I actually have to pay them and they are specific to me. Social costs also include the externalities of driving my car. When I drive my car, it contributes to some extent to polluting the atmosphere. I do not directly pay for this, but it affects society. When I drive my car, I contribute to traffic congestion. Again, I do not pay for this, but it affect other people who are also stuck in congestion, wasting their time.Social Costs:Social costs refer to the total costs to society on account of a production or consumption activity.Social costs are private costs borne by individuals directly involved in a transaction together with the external costs borne by third parties not directly involved in the transaction.Social Cost = Private Cost + External CostWhy Problem of Negative Externalities are not Given Importance:When firms do not worry about the negative externalities associated with their production, the result is excess production and unnecessary social costs. The problem, though serious, does not usually float up or given importance because:• The society does not know precisely who are the producers of harmful externalities.• Even if the society knows it, the cause-effect linkages are so unclear that the negative externality cannot be directly traced to its producer.Above ans i have taken from CA,CS,CMA Aaditya jain sir’s class notebook,
What does "internalizing the externality" mean?
Internalizing the externality means shifting the burden, or costs, from a negative externality, such as pollution or traffic congestion, from outside to inside (external to internal).This can be done through taxes, property rights, tolls, and government subsidies.An example in the case of pollution would be pollution rights. Instead of placing the burden (the costs of higher pollution) on people breathing air, a government would place a monetary tax on pollution. The tax would be in the form of pollution rights that companies would bid on and purchase from the government. So, if a company wants pollute more, they would have to pay more money for more pollution rights. This shifts the burden (the costs of higher pollution) from outside the company to inside the company.The purpose of internalizing an externality is to reduce the burden (or costs) of a negative externality by getting the people who are producing the externality to pay for the negative affects.
What is meant by translational externalities?
I would like to have a precise definition of what is meant by translational externalities. Also, i would like to know how the world is dealing with these externalities and what are the problems in implementing the proposed solutions. Thanks
How much does a MRI or CT scan of a head cost?
US specific answer: Traditionally with a good insurance you are looking at co-pay in couple hundred dollars. If you are a high deductible patient/uninsured an MRI at a hospital like Stanford can cost you anywhere from $2,500-$5,000, CTs are slightly cheaper.If you don’t want to pay this, you can opt for cash route and buy an MRI for a flat fee of $249 through AffordablesScans - Get MRI for $249.This site purchases unused MRI slots, which imaging centers sell at 80% discounts and passes all these savings to patients to make healthcare affordable again.
Explain the difference between positive and negative externalities?
That was a long *** answer. Here's a shorter version. When to people make a transaction of some sort (buy/sell, etc.) there is usually an effect on a third person - that is an externality. An externality is positive when the effect is good. If your neighbor re-builds the fence between your two properties entirely at his cost that is positive. An externality is negative when the effect is bad. If that same neighbor started his own thrash metal band and practiced in his backyard at 3am that is bad for you.
How does one acquire new, unsold vehicles from car graveyards?
From a dealership.Virtually all cars produced are sent to dealers, for individual sale. Sometimes, when the supply is high and sales are slow, dealers will be willing to negotiate substantial discounts, even taking a loss on the sale. But in most cases, the manufacturer provides what is tantamount to a rebate to the dealer for certain vehicles, thus lowering the dealer’s cost, so the dealership can still make a small margin.No, there are no “factory outlet” stores which sell “excess” cars at some huge discount to the consumer. Dealers will sometimes hold prior-year model cars well into a new model year, and still hold the price near where it was originally. Eventually, someone comes along and buys nearly every car.Sometimes, dealers are eager to use the floor space being taken up by unsold new cars, and they will take new vehicles to the car auctions, where they will be bought by other dealers. And no, before you ask, you nor any other individual consumer is permitted to attend (nor bid at) car auctions. Those are strictly open only to new and used car dealers.When manufacturers see that sales for a particular line are lagging, they usually make deals with the big car-rental agencies such as Hertz and Avis. Those companies are not really in the rental business, but in the business of producing used cars — current-year models with a few thousand miles (applied by rental customers) so that they can sell them as used cars. That is by far their biggest source of profit.Similarly, manufacturers will offer dealers special package prices, for certain models during slow times. If a dealer will take, say, 20 or 50 Ford Focuses in addition to the normal purchases from the manufacturer, a special discount will be allowed. The dealer, in turn, will usually try to sell those cars to high-volume customers who run a fleet of salesmen’s cars or delivery cars or service cars. So such manufacturer discounts are rarely passed along to individual car buyers.Everyone wants to get a colossal bargain, a huge price reduction, when buying a new car. Unfortunately, that doesn’t happen. Even those big-volume dealers who advertise huge discounts are only hyping, to bring in customers. Those guys get prices from individual customers little different from your neighborhood dealership.