Externalities

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Externalities

  1. 1. Externalities<br />The Real Costs<br />
  2. 2. Worldwide gas prices<br />
  3. 3. Worldwide gas taxes<br />
  4. 4. US Gas Tax<br />What is your opinion about the US gas tax?<br /> (Should it go up or down?)<br />
  5. 5. Externalities<br />Definition: An externality is an effect of a purchase or decision by one set of parties on others who did not have a choice and whose interests were not taken into account. Classic example of a negative externality: pollution, generated by some productive enterprise, and affecting others who had no choice and were probably not taken into account. <br />
  6. 6. Externalities <br />In other words…<br />Side Effects<br />
  7. 7. Externality Video<br />
  8. 8. Real Externalities<br />List 2 specific real life examples of externalities:<br />
  9. 9. Real Externalities<br />Smoking<br />Pollution<br />Industrial farming<br />Climate change<br />
  10. 10. The Free Market<br />The free market is efficient and sets the price of gas based on supply and demand.<br />Is there anything the free market does not consider in the cost?<br /> <br />Who has to pay the price of these costs? <br />
  11. 11. Hidden Costs<br />There are certain hidden or long term costs of the transaction that the free market does not take into consideration. Should the government impose a tax equal to the true costs of the transaction?<br />
  12. 12.
  13. 13. Exxon<br />Exxon set an annual profit record by earning<br />$45.2 billion, or nearly $1500 a second in 2008. <br />
  14. 14. Gas Price <br />What are some factors that determine the price of gas?<br />
  15. 15. Factors<br />Gas price free market only<br />Drilling<br />Refining<br />R & D<br />Marketing<br />Employees<br />Regulations<br />Profit<br />Tax<br />
  16. 16. Externalities <br />What factors that effect others are not considered when setting the price of gas?<br />
  17. 17. Externalities<br />Gas price with externalities<br />Cost of roads<br />Cost of infrastructure<br />Cost of wars<br />Environment<br />Climate Change<br />Pollution<br />Health costs of pollution<br />Cancer<br />Emphysema<br />Heart disease<br />
  18. 18. Who pays?<br />Who should pay those costs?<br />What should the government do about the costs that are not included in the price of gas but that we all bear?<br />
  19. 19. Gas prices <br />How much would you charge per gallon of gas to cover the externalities of gasoline?<br />

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