Question

Refer to Chapter 10 in the textbook which discusses externalities. Specifically, reference section 10-2, which details public policies towards externalities.
Additionally, find an article using your subscription to the Wall Street Journal detailing one proposed solution to pollution.

In your post, summarize the selected article and discuss the following:

Explain which of the public policies detailed in section 10-2 of the textbook best describes the proposed solution in the selected article.
Which of the public policy approaches outlined in section 10-2 would work best to resolve this pollution problem and why?
You are required provide a link to the article and support your answer with relevant ideas, facts, and examples.

Answer 1

An externality, sometimes called a spillover, occurs when an exchange between a buyer and seller has an impact on a third party who is not part of the exchange. Externalities can be positive or negative

What are Externalities?

Externalities refers to situations when the effect of production or consumption of goods and services imposes costs or benefits on others which are not reflected in the prices charged for the goods and services being provided.

Externalities Private markets offer an efficient way to put buyers and sellers together and determine what goods are produced, how they are produced, and who gets them. The principle that voluntary exchange benefits both buyers and sellers is a fundamental building block of the economic way of thinking. But what happens when a voluntary exchange affects a third party who is neither the buyer nor the seller?

Externalities can be negative or positive. If you hate country music, then having it waft into your house every night would be a negative externality. If you love country music, then what amounts to a series of free concerts would be a positive externality.

Learn more about externalities here:

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