Suppose a political candidate criticizes a government pollution permit policy that she says lets corporations buy and sell the right to pollute. She argues that our right to breathe and the future of our planet require real regulation instead of this type of government policy. Which of the following describes why most economists would disagree with her statement?  A corrective tax would result in a more efficient outcome than either tradable permits or government regulation would.    A free market in tradable pollution permits is typically more efficient than government regulation.    Clean air is a fundamental right, and government regulation will allow too much pollution.    The environment is so important that it should be protected as much as possible, regardless of the cost.

The table shows the demand for university education. The marginal cost of educating a student is a constant $4,000 a year and education creates an external benefit of a constant $2,000 per student per year. If all universities are public, calculate the tuition that will achieve the efficient number of students. How much will taxpayers have to pay?  

Smokers impose negative externalities on nonsmokers. Suppose the airspace in a restaurant is a resource owned by the restaurant owner. How would the owner respond to the negative externality caused by smokers?  Suppose smokers own the airspace. How would that change matters?  If the government gives ownership of the air to nonsmokers, would that change matters? Explain your answer.  What does a ban on smoking in the restaurant do?

What is an externality? Please give an example of the negative externality. For the flu shot, how does the positive externality shift the marginal benefit curve (the demand curve)? We know that there will be a deadweight loss if consumers purchase the underlying good, which generates positive externality at the market price. Is there a deadweight loss in this case? Why or Why not?

Air horns impose many external costs on society: the risk of being deafened, the annoyance of being awakened in the middle of the night, and so on. Therefore, the market equilibrium quantity of air horns is not equal to the socially optimal quantity. The following graph shows the demand for air horns (their private value), the supply of air horns (the private cost of producing them), and the social cost of air horns, including both the private cost and external costs. Use the black point (plus symbol) to indicate the market equilibrium quantity. Next, use the purple point (diamond symbol) to indicate the socially optimal quantity.

Suppose households do not care much for better environmental quality. Use the demand & supply model for urban labor to illustrate what happens to total employment (L) when a tax is imposed on firms to internalize the negative externalities of pollution. Briefly discuss.

Can you answer this.

Governments pursue various policies to remedy the inefficiencies caused by externalities.  List and describe the various policies the government may use?

Sketch an externality graph (model) that is positive and demonstrates the vaccine market. Make sure to label the private vaccine usage amount (the amount of vaccines that are used in the market if the market is left to its own devices to find an equilibrium.) As well, mark the socially optimal level of vaccine usage if the gov. involves itself to reach a level of vaccine usage that gives all individuals protection from a deadly virus. Describe what the governments reason may be to select to subsidize the market for vaccines?