Figure 1 shows how Calvin carefully avoids creating a positive externality (think of this as the equivalent of a factory applying a filter to eliminate any polluting emissions). Assume that this way of snow shovelling does not create any additional costs for Calvin (no extra effort and he has no plans to return home any time soon). b) As creating positive externalities leads to a social problem (see question a), and Calvin's way of snow shovelling avoids creating positive externalities, does Calvin's behaviour imply an efficiency improvement from a social point of view? Exnlain

Figure 1 shows how Calvin carefully avoids creating a positive externality (think of this as the equivalent of a factory applying a filter to eliminate any polluting emissions). Assume that this way of snow shovelling does not create any additional costs for Calvin (no extra effort and he has no plans to return home any time soon). b) As creating positive externalities leads to a social problem (see question a), and Calvin's way of snow shovelling avoids creating positive externalities, does Calvin's behaviour imply an efficiency improvement from a social point of view? Exnlain

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter17: Market Failure: Externalities, Public Goods, And Asymmetric Information

Section: Chapter Questions

Problem 12QP

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