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Was demand for its products more elastic or inelastic and why? Were consumers well informed of the negative externalities?
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- Explain a positive and negative externality that you have recently consumed. Please relate your answer to the characteristics of elasticity. Why does the government have to get involved when an externality is present in the market?What would happen if the government subsidized consumption of this product because it has positive externalities in consumption?In which way could smoking exert a positive externality on others?
- How does the price elasticity of demand for gasoline impact the effectiveness of taxes on gasoline aimed at correcting a negative externality?How is the increase in post-secondary education (e.g. positive externality) going to effect consumer behavior in the future?If the government subsidizes vaccination against influenza to internalize the externality, should it impose the subsidy on consumers or producers of flu vaccines? How large should the subsidy be? How much less per flu vaccine would patients (i.e., consumers) pay? How much more would manufacturers (i.e., producers) of flu vaccines receive?
- What would be an example of a negative externality? What would be an example of a positive externality? What types of regulations do you think are the most effective to induce firms to pollute less?How would the owner respond to the negative externality caused by smokers?Can an activity generate both positive and negative externalities at the same time? Explain your answer.
- Give an example of a positive and negative externality. Explain why market outcomes are inefficient in the presence of these externalities.If we want to increase the cigarette tax to promote environmentally-friendly behavior, the tax will discourage the consumption of cigarettes by the greatest extent when the price elasticity of demand equalsIs capacity in a wireless network a real or pecuniary externality?
