A shift from S₁ to S₂ reflects the change that happens when a negative externality is taken into account. A shift from D₁ to D₂ reflects the change that happens when a positive externality is taken into account.
-Refer to the above figures. An external cost exists. This will lead to a(n)
Definitions:
Social Contract
A philosophical theory or model that originates from the Age of Enlightenment, positing that individuals have consented, either explicitly or tacitly, to surrender some of their freedoms and submit to an authority in exchange for protection of their remaining rights.
Rawlsian Justice
A theory of justice that emphasizes fairness and equality, proposing principles to structure society for the benefit of all, especially the least advantaged.
Public Good
A commodity or service that is provided without profit to all members of a society, either by the government or a private individual or organization.
Moral Obligation
A commitment or duty to act in a morally sound manner, often beyond legal requirements, guided by personal ethics or conscience.
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