Market Failure: Externalities (MRU Based)

The price you pay for an iTunes download

• Private costs

• External costs

• Private benefits

• External benefits

The benefit your neighbor receives from hearing you play your pleasant music

• Private costs

• External costs

• Private benefits

• External benefits

The annoyance of your neighbor because she doesn’t like your achingly conventional music

• Private costs

• External costs

• Private benefits

• External benefits

The pleasure you receive from listening to your iTunes download

• Private costs

• External costs

• Private benefits

• External benefits

The price you pay for a security system for your home

• Private costs

• External costs

• Private benefits

• External benefits

The safety you enjoy as a result of having the security system

• Private costs

• External costs

• Private benefits

• External benefits

The crime that is more likely to occur to your neighbor once a criminal sees a “Protected by alarm” sticker on your window.

• Private costs

• External costs

• Private benefits

• External benefits

The extra safety your neighbor might experience because criminals tend to stay away from neighborhoods that have a lot of burglar alarms

• Private costs

• External costs

• Private benefits

• External benefits

The extra safety your neighbor might experience because criminals tend to stay away from neighborhoods that have a lot of burglar alarms

• Private costs

• External costs

• Private benefits

• External benefits

The bad reputation your entire class receives because of a few misbehaving pupils.

• Private costs

• External costs

• Private benefits

• External benefits