UNIT 7- EXTERNALITIES

Question 1

What is an externality?

Answer 1

The impact on third parties between a transaction

Question 2

Give an example of a negative externality, and a positive

Answer 2

😁

Question 3

Explain cap and trade versus emissions tax

Answer 3

CAP & TRADE: a program designed by government to cap, the total level of admissions by creating a market for pollution permits

EMISSIONS TAX: cost depends on the amount of pollution a firm produces

Question 4

What is Pigouvian Subsidy ?

Answer 4

A program is designed to encourage activity could generate positive externalities

Question 5

What is technology spillover?

Answer 5

An external benefit, the results from knowledge spreads among individuals and firms

Question 6

What is excludible and nonexcludable good? Give example

Answer 6

EXCLUDABLE: suppliers CAN prevent people who don’t pay for it from consuming it

NON EXCLUDABLE: the supplier can NOT prevent consumption of the good by people who do not pay for it

Question 7

What is a good that is non-rival in consumption? Give an example.

Answer 7

NONRIVAL: if more than one person can consume the same unit at the same time