New Key Terms Externality: An economic side effect of a good or service that generates cost or benefits to another third person. Positive Externality: The positive benefit generated to another person by the production of a good or service. Negative Externality: The negative cost generated to another person by the production of a good or service.

Three More terms… Cartel: A group of businesses producing the same good or service attempting to control the market price of their product. Collusion: An agreement by a group of businesses to divide the market and/or set prices for their product Price: The compensation given for a good or service.

Review What are the four principles of capitalism? Normal versus inferior goods?

Why are property rights important? Why is the Free transaction an important aspect of property rights?

Hunting for Beans

Two parties are hunting for beans on public land. They can catch up to 6 beans per turn Beans have sex and reproduce after each round at a rate of 1 for 8

Round 1: All beans on public property. What happened?

Round 2: Beans are split between public and private property. Only owners could hunt on private property? What happened? How was this different from Round 1?

Survivor LHS

Survivor LHS What was the outcome of round 1?

Survivor LHS What was the outcome of round 2?

Why did tribes behave the way they did in the first round?

Why the change? During round 2 more “thinking” went into the competition? Tribes were “managing” attempting to wisely their resources (fish). (Economic efficiency)