Example: stock market
Externalities: Problems and Solutions

Externalities: Problems and Solutions

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Private marginal cost (PMB): The direct bene t to con-sumers of consuming an additional unit of a good by the con-sumer. Social marginal cost (SMB): The private marginal bene t to consumers plus any costs associated with the consumption of the good that are imposed on others Example: Using a car and emitting carbon contributing to global warming 6

  Cost, Marginal, Externalities

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