3. Suppose that air pollution is a problem. a. Describe a "cap and trade" policy as a possible solution   b What, if any, externalities are addressed by this program. Include in your explanation whether these are positive or negative, and how the policy ameliorates them. c.What might be some drawbacks to this policy?

5.. "Since a public good is enjoyed by all members of society, willingness to pay for the good will not diminish as the amount produced increases." Evaluate and use an example to support your answer. This statement is (correct incorrect). Public goods face (increasing, constant, diminishing ) returns like any other good. Consider the number of highways in a town, for example. Citizens of a town are very willing to pay for the first highway, as it produces large gains to the town. Successive highways produce (more and more, less and less ) willingness to pay because the citizens face lower and lower gains from the increased number of highways. In a town of, say 20,000, 15 highways (would, would not) produce much more benefit than just 2 or 3 highways because of ( increasing, constant, diminishing ) returns.

Externalities - Definition and examples An externality arises when a firm or person engages in an activity that affects the wellbeing of a third party, yet neither pays nor receives any compensation for that effect. If the impact on the third party is adverse, it is called a ___________ externality.   The following graph shows the demand and supply curves for a good with this type of externality. The dashed drop lines on the graph reflect the market equilibrium price and quantity for this good.

a. What sector produces most of Australia’s GHG emissions? Clearly state the relevant references.b. Why do firms pollute?

2. Refer to Graph 10-1. Assume the externality is not internalised. What is the loss to society from the last unit of the good produced by the market? A. P3-P2 B. P2-P1 C. P3-P1 D. ZeroGraph 10-1 Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.

1. Suppose 20 people each have the demand Q = 20 − P for streetlights and 5 people have the demand Q = 18 − 2P for streetlights. The cost of building each streetlight is $10.a. Write the social marginal benefit equation: MBS = _______ - _________ Q/2. Hint: Type integers.b. The socially optimal number of street lights is ________. Hint: Type the number in two decimal places.  2. The __________ theorem states: As long as negotiation costs are negligible and affected consumers can negotiate freely with each other, the court could allocate the entitlement to either party, and an efficient allocation would result. Hint: The answer is case sensitive.  PLEASE FILL OUT THE SPACES

a) Explain how the positive externalities normally created by activities such assnow shovelling lead to an inefficiency from a social point of view.

1. Explain in detail a) Economic externalities arise because of the enactment of tariffs. Is there a way to account for such externalities? Can this be related  with Coase’s and Pigou’s work. b) Are there any similarities and differences between Tariffs and Quotas?