List and explain the two defining characteristics of public goods.

• Draw a correctly labeled graph showing a market with a positive externality. Label Demand, MPB, MSB, Supply, MPC, MSC, the market quantity (Qmkt), and the efficient quantity (Qopt)

Specialized electronic batteries, such as those for laptops, are hard to dispose of safely, yielding excess pollution when one gets thrown away. Suppose that producing these batteries creates a social cost of $150 per unit. Please shift the appropriate curve(s) to reflect this social cost. 1000 900 800 700 600 S 8500 400 300 200 100 0 Private Cost Which of the following is the label of the curve that shifted? Supply private Demand 1000 2000 3000 4000 5000 6000 7000 8000 Quantity of Laptops Supply social Demand private Demand social

Confused and unsure how to solve properly

Describe a situation where you experienced a positive or negative externality or free-riding by you or someone else.  Why are these situations problematic?

Too much of a good or service is produced when there is a Private cost External benefit Public good Positive externality Negative externality

None

Describe how government actions can lead to more efficient outcomes when negative and positive externalities are present.

The primary source of air pollution in the small town of Smokey, Nevada is a nearby steel mill. The local environmental agency has decided that the mill needs to reduce its emissions because the town's population is located directly downwind from it. Currently the agency is considering three different approaches to reducing pollution from the mill: a technology standard, an emission standard and an emission tax. Why might the owner of the mill prefer an emission standard to a technology standard that would produce the same level of emissions? a Because with emission standards the polluter is more flexible in selecting the technology that will minimize her abatement cost Ob. Because polluters usually try to stick to their existing technology O C. Because it has been proven to be easier to implement O d. Because polluters, as all producers are suspicious about new technologies

explain why the positive externality associated with the production of a pure public good implies that the market supply of the good is likely not efficient.