Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506725
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter 5, Problem 5CQ
To determine
Define external cost and external benefit.
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If the government subsidizes vaccination against influenza to internalize the externality, should it impose the subsidy on consumers or producers of flu vaccines? How large should the subsidy be? How much less per flu vaccine would patients (i.e., consumers) pay? How much more would manufacturers (i.e., producers) of flu vaccines receive?
Externality is a problem that create market failure. How the externalities can be internalized to improve market efficiency?
Externalities
Do you think that there would be external effects associated with Water from a uranium mine leaking into Kakadu National Park? If so, what would be the nature of the external effects? Can you think of policies that might deal with each external effect (that is, improve social wellbeing)?
Chapter 5 Solutions
Economics: Private and Public Choice (MindTap Course List)
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- What is an externality? Provide two examples each of positive and negative externalities.arrow_forwardExplain the concept of an externality. Explain and show graphically how externalities lead to market failure and an inefficient allocation of resources.arrow_forwardExplain the two main causes of market failure (externality and market power) and give an example of each.arrow_forward
- Identify at least one positive and negative externality from running a hamburger shop. What is one example of how an externality could affect the price of your hamburger?arrow_forwardIf there are no externalities or market power and all markets are in equilibrium, what conclusions can we draw from this in economic theory?arrow_forwardExplain the difference between a positive externality and a negative externality. Can both types of externalities result in market failure? Why or why not?arrow_forward
- negative externality and positive externality means what and what is an example of each.arrow_forwardWhat are externalities; and how the government can fix itarrow_forwardWhat are (environmental) externalities? Explain one example from production/consumption condition that would result in negative externalitiesarrow_forward
- Give an example of a positive and negative externality. Explain why market outcomes are inefficient in the presence of these externalities.arrow_forwardwhich of the following is most likely to generate an externality? a) taxes that are collected to pay for public schools? b) a newlywed couply buys a tv for their family room c) teachers at a local high school have pizza delivered every friday for lunch can you tell me which is correct? and explain why please. I understand the concept of an externality but for some reason i got this question wrong.arrow_forwardExplain how the effects of externalities can be remediedarrow_forward
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