【正文】 into account the externalities involved. The oute is independent of who has the property rights. 169。 2020 Pearson AddisonWesley Negative Externality: Pollution Private Cost and Social Cost of Pollution A private cost of production is a cost that is borne by the producer. Marginal private cost (MC) is the private cost of producing one more unit of a good or service. An external cost of production is a cost that is not borne by the producer but is borne by others. Marginal external cost is the cost of producing one more unit of a good or service that falls on people other than the producer. 169。17 ECONOMICS OF THE ENVIRONMENT 169。 2020 Pearson AddisonWesley Negative Externality: Pollution Marginal social cost (MSC) is the marginal cost incurred by the entire society—by the producer and by everyone else on whom the cost falls. Marginal social cost is the sum of marginal private cost and marginal external cost. MSC = MC + Marginal external cost We express costs in dollars but remember that the dollars represent the value of a fone opportunity. Marginal private cost, marginal external cost, and marginal social cost increase with output. 169。 2020 Pearson AddisonWesley Negative Externality: Pollution The Coase solution works only if transactions costs are low. Transactions costs are the cost of conducting a transaction. An example is the transactions costs of buying a home include fees for a realtor, a mortgage loan advisor, and legal assistance. When a large number of people are involved in an externality and transactions costs are high, the Coase solution of establishing property rights doesn’t work and governments try to deal with the externality. 169。 2020 Pearson AddisonWesley The Tragedy of the Commons Figure illustrates the sustainable catch. As the stock of fish increases, the sustainable catch increases. Beyond that number, more fish pete for food and the sustainable catch falls. If the catch exceeds the sustainable catch, the fish stock diminishes. 169。 2020 Pearson AddisonWesley 169。 2020 Pearson AddisonWesley –Entrepreneurship –Entrepreneurship services are not traded in markets. –Entrepreneurs receive the profit or bear the loss that results from their business decisions. The Anatomy of Factor Markets 169。 2020 Pearson AddisonWesley ?Changes in a Firm’s Demand for Labor –The firm’s demand for labor depends on ?The price of the firm’s output ?The prices of other factors of production ?Technology The Demand for a Factor of Production 169。 2020 Pearson AddisonWesley –Ine Effect –The higher the wage rate, the greater is Jill’s ine. –An increase in ine enables the consumer to buy more of most goods. –Leisure is a normal good, and the ine effect describes how a person responds to a higher wage rate. –The person increases the quantity of leisure and decreases the quantity of labor supplied. Labor Markets 169。 2020 Pearson AddisonWesley –Because the monopsony controls the wage rate, the marginal cost of labor exceeds the wage rate. –The marginal cost of labor curve MCL is upward sloping. –The monopsony maximizes profit by hiring the quantity of labor at which MCL = VMP. Labor Markets 169。 2020 Pearson AddisonWesley ?A Union and a Monopsony –Sometimes both the firm and the employees have market power when a monopsony encounters a labor union, a situation called a bilateral monopoly. –Both the employer and the union must judge each others market power and e to an agreement on the wage rate paid and the number of workers employed. –Depending on the relative costs that each party can inflict on the other, the oute of this bargaining might favor either the union or the firm. Labor Markets 169。 2020 Pearson AddisonWesley Market Supply Curve A market supply curve shows the quantity of labor supplied by all households in a particular job market. The market supply curve is the horizontal sum of the individual supply of labor curves. Along the supply curve in a particular job market, the wage rates available in other job markets remain the same. Despite the fact that an individual’s labor supply curve eventually bends backward, the market supply curve of labor slopes upward. Labor Markets 169。 2020 Pearson AddisonWesley ?The Price of Other Factors of Production ?If the price of using capital decreases relative to the wage rate, a firm substitutes capital for labor and increases the quantity of capital it uses. ?Usually, the demand for labor will decrease when the price of using capital falls. The Demand for a Factor of Production 169。 2020 Pearson AddisonWesley –Table shows the calculation of VMP. –From the firm’s total product schedule, calculate the marginal product of labor. The Demand for a Factor of Production 169。 2020 Pearson AddisonWesley 169。 2020 Pearson AddisonWe