Principles of Economics 2e
Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
Textbook Question
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Chapter 12, Problem 1SCQ

Identify the following situations as an example of a negative or a positive externality:

  1. You are a birder (bird watcher), and your neighbor has put up several birdhouses in the yard as well as planting trees and flowers that attract birds.
  2. Your neighbor paints his house a hideous color.
  3. Investments in private education raise your country’s standard of living.
  4. Trash dumped upstream flows downstream right past your home.
  5. Your roommate is a smoker, but you are a nonsmoker.

Expert Solution
Check Mark
To determine

(a)

Whether a birder will have a positive or a negative externality is to be determined.

Answer to Problem 1SCQ

Positive Externality

Explanation of Solution

Since a birdwatcher is regarded as a third party. So, the benefit of enjoying the sweet sound of birds is regarded as a positive externality for a bird watcher.

Positive externality: is defined as a benefit that is received by a third-party as a consequence of a transaction that is economic in nature.

The Third-parties include any organisation, individual, property owner that is indirectly affected.

Economics Concept Introduction

Negative externality:  is defined as a cost that is borne by a third party as a consequence of a transaction that is economic in nature.

So, in those transactions, the producer and consumer are regarded as the first and the second parties, and the third parties include any organisation, individual, property owner that is indirectly affected.

Positive externality: is defined as a benefit that is received by a third-party as a consequence of a transaction that is economic in nature.

The Third-parties include any organisation, individual, property owner that is indirectly affected.

Expert Solution
Check Mark
To determine

(b)

Whether the house painted by your neigh borer with a hideous color will have a positive or a negative externality is to be determined.

Answer to Problem 1SCQ

Negative Externality

Explanation of Solution

The house of the neighbor painted with a hideous color will have a negative externality as the hideous color is regarded as an ugly and shocking color.

Such kind of color will irritate and will not give a smoothening effect to the onlooker.

Economics Concept Introduction

Negative externality:  is defined as a cost that is borne by a third party as a consequence of a transaction that is economic in nature.

So, in those transactions, the producer and consumer are regarded as the first and the second parties, and the third parties include any organisation, individual, property owner that is indirectly affected.

Positive externality: is defined as a benefit that is received by a third-party as a consequence of a transaction that is economic in nature.

The Third-parties include any organisation, individual, property owner that is indirectly affected.

Expert Solution
Check Mark
To determine

(c)

Whether the investments in private education raise the country’s standard of living will have a positive or a negative externality is to be determined.

Answer to Problem 1SCQ

Positive Externality

Explanation of Solution

The investment in private education will increase the country’s standard of living- this will be regarded as a positive externality as it will bring its benefits to the third parties.

Economics Concept Introduction

Negative externality:  is defined as a cost that is borne by a third party as a consequence of a transaction that is economic in nature.

So, in those transactions, the producer and consumer are regarded as the first and the second parties, and the third parties include any organisation, individual, property owner that is indirectly affected.

Positive externality: is defined as a benefit that is received by a third-party as a consequence of a transaction that is economic in nature.

The Third-parties include any organisation, individual, property owner that is indirectly affected.

Expert Solution
Check Mark
To determine

(d)

Whether the trash dumped upstream flows downstream right past your home will have a positive or a negative externality is to be determined.

Answer to Problem 1SCQ

Negative externality.

Explanation of Solution

The trash which is dumped upstream and flows downstream right next to the house will definitely affect and the effect will be negative.

So, in this situation the effect will be negative externality.

Economics Concept Introduction

Negative externality:  is defined as a cost that is borne by a third party as a consequence of a transaction that is economic in nature.

So, in those transactions, the producer and consumer are regarded as the first and the second parties, and the third parties include any organisation, individual, property owner that is indirectly affected.

Positive externality: is defined as a benefit that is received by a third-party as a consequence of a transaction that is economic in nature.

The Third-parties include any organisation, individual, property owner that is indirectly affected.

Expert Solution
Check Mark
To determine

(e)

If your roommate is a smoker and you are a non smoker will have a positive or a negative externality is to be determined.

Answer to Problem 1SCQ

Negative externality.

Explanation of Solution

If your roommate is a smoker and you are a non smoker it will definitely have a negative externality. As the non smoker will become a passive smoke that is he is not smoking directly but indirectly the affect of that smoke will affect his lungs.

So, in this situation the effect will be negative externality.

Economics Concept Introduction

Negative externality:  is defined as a cost that is borne by a third party as a consequence of a transaction that is economic in nature.

So, in those transactions, the producer and consumer are regarded as the first and the second parties, and the third parties include any organisation, individual, property owner that is indirectly affected.

Positive externality: is defined as a benefit that is received by a third-party as a consequence of a transaction that is economic in nature.

The Third-parties include any organisation, individual, property owner that is indirectly affected.

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Students have asked these similar questions
Identify a negative externality
Which of the following generate the type of externality previously described? Check all that apply. The city where you live has granted a permit to put a movie theater in your neighborhood, causing traffic jams at night and on weekends. A microbiology lab has published its breakthrough in swine flu research. Your roommate, Lucia, has bought a puppy that barks all day while you are trying to study economics. Eric has planted several trees in his backyard that increase the beauty of the neighborhood, especially during the fall foliage season.
Which of the following are examples of negative externalities? Group of answer choices Your neighbor paints her house and upgrades the landscaping. An airport is constructed to support commerce and travel in your community Trash dumped upstream flows downstream right past your house.

Chapter 12 Solutions

Principles of Economics 2e

Ch. 12 - The state of Colorado requires oil and gas...Ch. 12 - Consider the case of global environmental problems...Ch. 12 - A country called Sherwood is very heavily covered...Ch. 12 - What is an externality?Ch. 12 - Give an example of a positive externality and an...Ch. 12 - What is the difference between private costs and...Ch. 12 - In a market without environmental regulations,...Ch. 12 - What is command-and-control environmental...Ch. 12 - What are the three problems that economists have...Ch. 12 - What is a pollution charge and what incentive does...Ch. 12 - What is a marketable permit and what incentive...Ch. 12 - What are better-defined property rights and what...Ch. 12 - As the extent of environmental protection expands,...Ch. 12 - As the extent of environmental protection expands,...Ch. 12 - What are the economic tradeoffs between low-income...Ch. 12 - What arguments d0 low-income countries make in...Ch. 12 - In the tradeoff between economic output and...Ch. 12 - What does a point inside the production...Ch. 12 - Suppose you want to put a dollar value on the...Ch. 12 - Would environmentalists favor command-and-control...Ch. 12 - Consider two ways of protecting elephants from...Ch. 12 - Will a system of marketable permits work with...Ch. 12 - Is zero pollution possible under a marketable...Ch. 12 - Is zero pollution an optimal goal? Way or why not?Ch. 12 - From an economic perspective, is it sound policy...Ch. 12 - Recycling is a relatively inexpensive solution to...Ch. 12 - Can extreme levels of pollution hurt the economic...Ch. 12 - How can high-income countries benefit from...Ch. 12 - Technological innovations shift the production...Ch. 12 - Show the market for cigarettes in equilibrium,...Ch. 12 - Refer to Table 12.2. The externality created by...Ch. 12 - Table 12.12, shows the supply and demand...Ch. 12 - A city currently emits 15 million gallons (MG) of...Ch. 12 - In the Land of Purity, there is only one form of...
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