A) Using demand and supply diagram, describe and discuss positive externality in production of a product/service. In your discussion, explain why the existence of a positive externality leads to inefficiency. B) Consider your answer in part (a), discuss two methods that the government may use to intervene in the market to eliminate the market inefficiency. In your discussion, explain which method is preferred

A) Using demand and supply diagram, describe and discuss positive externality in production of a product/service. In your discussion, explain why the existence of a positive externality leads to inefficiency. B) Consider your answer in part (a), discuss two methods that the government may use to intervene in the market to eliminate the market inefficiency. In your discussion, explain which method is preferred

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter10: Externalities

Section10.1: Externalities And Market Inefficiency

Problem 1QQ

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Similar questions

Question 5 a) Using demand and supply diagram, describe and discuss a positive externality in the production of a product/service. b) Referring to your answer in part (a), discuss how the government can intervene in the market to correct for the market failure.
c) Using a supply and demand diagram, demonstrate how a positive externality leads to market inefficiency. How might the government help to eliminate this inefficiency?
Market Failure, Public Sector and Public Choice( from chapters 7, 8 and 9) How can the government intervene to force consumers to internalize external costs associated with: a. negative externalities? b. positive externalities? Explain your answer with the clear and supportive explaining reasonable idea with creative work
(a) Explain the difference between a positive externality and a negative externality and why each result in an equilibrium point that is not optimal for society. (b) which externality results in an equilibrium quantity that is higher than the optimal social quantity of a good? (c) how can the impact of the externality in part b be corrected?
In the article Examine the following market failures: public good, asymmetric information, positive or negative externality. (i) identify the type of market failure being discussed in the article and discuss why market failure occurs in this scenario.
Why is a price change NOT an externality? Select one: a. A price change affects bystanders, not market participants. b. A price change does NOT change total costs or benefits, it only changes who buys the good. c. A change in price changes the marginal benefit of a good but does NOT change who buys and sells the good. d. A price change redistributes costs but not benefits.
Consider an economy which is heavily dependent on tourism. To boost tourist revenue, the government has decided to reclaim the sea to build a theme park at the coastal area. This has resulted in sea pollution, reduces the fish stock and threaten the livelihoods of fishermen in the vicinity. (a)Describe the type of externality exist in the scenario. Explain with a suitable diagram and highlight the area of the efficiency loss. (b)Explain the remedial action to rectify the externality problem.
Describe a positive or negative externality that you have observed in your life. In the example you provide, determine if the externality is positive or negative, explain why, and discuss if you feel like government intervention is present and/or needed. If so, how does (or how could?) the government increase market efficiency?
An externality is the impact of: a. None of the answers is correct. b. one person’s actions on the well-being of another person c. a person’s actions on his well-being.