Concept introduction:
If people are prevented from the use of the good they have not paid for, then such goods are treated as excludable goods whereas if people cannot be prevented from the use of the good they have not paid for, then such goods are treated as non-excludable goods.
Marginal
Marginal social benefit: The increased benefit for the society by any of the activity of an individual or firm is known as marginal social benefit, it is calculated by summing up marginal external benefit and marginal private benefit.
Pigouvian tax: This tax is laid on the market activity by the private firm or individual who led to a negative externality or harm to any third person or third party, it is generally kept same as the social cost and it is laid to correct the inefficient outcome of the market.
Want to see the full answer?
Check out a sample textbook solution- Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSONEngineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningManagerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education