ECON MICRO (with MindTap, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
6th Edition
ISBN: 9781337408059
Author: William A. McEachern
Publisher: Cengage Learning
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Chapter 3, Problem 12P
To determine
The reasons as to why markets should not determine the amount of goods produced that imposes a negative externality
Introduction:
Negative Externality: It is a
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Question 3
Some reasons why resources could be allocated inefficiently by the market are negative
externalities and positive externalities.
(a) Explain, using graphs, what the problem is in each case, and explain possible solutions to
each problem.
(b) All of these problems might be described as arising due to poorly defined property rights.
Explain the relationship of property rights to these instances where the market fails to
allocate resources efficiently.
(c) Explain how a corrective tax can eliminate the inefficiency caused by a negative
externality. Use a graph to assist your explanation
(d) Why does the optimal tax promote the efficient use of resources?
D Question 7 Noise generated by an airport best illustrates.
market power.
overproduction of private goods.
an externality.
an inequity.
Current Event on Economics from a reputable News Article, Report or Journal related to Externalities?
Explanation should be 3 paragraphs as follows:
Paragraph 1: What is the Economic issue? (Describe the issue)
Paragraph 2: What is the connection to Externalities? (positive, negative, policy) (Use Math, Graph or data to explain or support your idea)
Paragraph 3: Explain how this affects the Economy (individual, industry, national or global)
Cite at least one source (News Article, Video, etc.) for any data.
Chapter 3 Solutions
ECON MICRO (with MindTap, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
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