Show how a tax or subsidy can be used to counteract an externality,and discuss the pros and cons of such a solution.

Q: Illustrate using your own words and a suitable example the effect of negative externality such as…

A: Externality is the negative or positive spillover by the consumer or producer which affects the…

Q: How do you calculate the dollar value of the net gain to society from correcting the externality

A: The dollar value of net gain to society from correcting the externality can be calculated as the…

Q: True or False? In the presence of a positive externality, a Pigouvian subsidy results in less…

A: Positive externality refers to the situation when the action of an individual contributes positively…

Q: If you start with the competitive solution (Q=?) and you want to assess a Pigouvian tax equal to the…

A: Economics is a branch of social science that describes and analyzes the behaviors and decisions…

Q: Why does the government have to get involved when an externality is present in the market?

A: Externality: It is a cost that arises because of a producer that is not incurred financially or…

Q: Externality is a problem that create market failure. How the externalities can be internalized to…

A: Externality causes market failure.Externality may be positive or negative and its effect causes…

Q: Give solutions to the externality problem.

A: The situation that depicts either a benefit or a cost being caused by a producer not received or…

Q: externality arises when a. not all costs and benefits are included in the price of a good b. a…

A: The market failure occurs when the market demand and supply do not deliver the efficient result.

Q: "A Pigouvian tax will be more effective in remedying a negative externality, the more elastic the…

A: The Pigouvian tax is a type of emission tax which imposed to reduce the external cost created by…

Q: Why transaction cost has become the reason to solve an externality problem?

A: Externality is the negative or positive spillover by the consumer or producer which affects the…

Q: The Centers for Disease Control and Prevention estimates that every alcoholic drink consumed…

A: ‘Externality’ means the uncompensated impact of one person’s actions on well being of a bystander.…

Q: Explain how a tax or subsidy might be used to “correct” for the inefficiency of a market equilibrium…

A: Some externalities are bad; for instance, if a company chooses to raise profits and minimise costs…

Q: Explain how the effects of externalities can be remedied

A: Externalities are spillover effects on third part or on society because of consumption or production…

Q: Why are efficiency taxes preferred to regulatory policies as methods remedy externalities?

A: Externalities alludes to circumstances when the impact of creation or utilization of labor and…

Q: 'zero-externality' solution to the most threatening externality?

A: The externality depicts the situation of market failure and inefficiency. The externalities are of…

Q: a) market-based policy

A: The economic policy of France 2017 focused on more inclusive growth by improving the social and…

Q: How large tax rate should the government use to eliminate a negative externality? Why does this tax…

A: A negative externality occurs when the production/consumption of a   leads to a cost for third…

Q: In what ways do company investments in research and development create positive externalities?

A: Answer: Positive externality refers to the positive impact on a party due to the actions of another…

Q: Explain why a firm is not able to deal with an externality

A: When a third party receives benefits or costs while consuming or producing a good or service it is…

Q: Offer an example of a good or service with a negative externality. What is the externality of the…

A: Negative externalities arise when a good or service's product and/or consumption has a negative…

Q: Thich of the following is an example of a negative externality? the benefit you receive when your…

A: Externality refers to cost or benefit that tends to affect people who is not the part of production…

Q: Give an example of a positive and negative externality.  Explain why market outcomes are inefficient…

A: Externality is an economic term referring to the cost (negative) or benefit (positive) caused by a…

Q: Does an externality cause total surplus to increase or decrease?

A: Total surplus is the sum of the consumer's surplus and producer's surplus in the economy.…

Q: Using a supply and demand diagram, demonstrate how a negative externality leads to market…

A: Externalities means when the production of economic agents causes benefits or cost to others. When…

Q: Compared to a good with no externalities, a good with a negative externality will appear to have…

A: Externality:- An externality can be explained as an expense or benefit incurred or gained by a…

Q: A positive externality results when   A. someone pays for a good or service even though she is not…

A: Externality is the negative or positive spillover by the consumer or producer which affects the…

Q: Consider two ways to protect your car from theft. The Club (a steering wheel lock) makes it…

A: Externality: - it is a cost or benefit generated for the third party by the actions of other people.

Q: Fish that swim in international waters are a common good that are freely available to anyone who…

A: ANSWER   Fish that are huge in size, carry on with quite a while and are delayed to duplicate are…

Q: Which of the following situations is an example of a market with a negative externality? O A…

A: Negative externality refers to the situation when the surrounding area, that include environment and…

Q: What is an externality? Provide an example.

A: There are various government policies and private solutions to solve the problem of an externality.…

Q: Why are spillover costs and spillover benefits also called negative and positive externalities? Show…

A: An externality is a cost or benefit being caused by a producer which is not either financially…

Q: Give an example of a negative externalitity and a positive externality

A: Externalities are costs or benefits to a third party who is not involved in a particular market…

Q: If a good that generates negative externalities is priced to internalize the externality, then its…

A: Money has been critically evaluated and has been evolved since the ages and currently money is used…

Q: Define externality .

A: Economics is a social science that discusses human behavior regarding their unlimited wants in terms…

Q: Which of the following instruments is government most likely to apply when confronted with a…

A: Positive externality occurs when production or consumption results in external benefits on third…

Q: Why are externalities considered a sign of market failure?

A: Market failure occurs when there is inefficient allocation of resources in the free market.

Q: Which of the following results in a positive externality? You bring your lunch to school You pass a…

A: In an economy, externality is one of the market uncertainties that results in market inefficiency or…

Market Failure Analysis

To understand Market failure, we need to first understand welfare economics. An Italian economist, Vilfredo Pareto stated that allocation of resources in an efficient manner such that an economic change, which harms no one and makes someone better off, indicates an increase in social welfare. It is also called Pareto Optimality, where resources cannot further be reallocated without harming one. This does not apply to those economic changes, which harm some and benefit others. social welfare increases if the utility of any of its members' increases and none decrease in the economy.