Enter Title

Solutions to Externalities

100

One solution is to implement ... (example: noise restrictions)

Laws, rules, regulations

100

This solution is a quota on total production

Cap and Trade

100

This solution creates financial cost equal to external cost

Corrective Tax

100

Corrective solution equal to external benefit

Corrective Subsidy

100

This solution requires costless bargaining and assignment of property rights (Coase Theorem)

Private Bargaining

Characteristics of Goods

100

When someone can be easily excluded from consuming something

Excludable

100

When your consumption prohibits others to consume it

Rival

100

When someone cannot be easily excluded from consuming something

Nonexcludable

100

When your consumption does not prohibit others to consume it

Nonrival

100

In terms of the characteristic, fireworks is an example of...

Non-excludable good

Classifications of Goods

100

Rival and excludable

Private Good

100

Rival and nonexcludable

Common Resource

100

Nonrival and excludable

Club Goods

100

Nonrival and nonexcludable

Public Goods

100

In terms of the classification, national defense is a...

Public Good

Issues with different types of Goods

100

Issue with Public Goods

Free rider problem

100

Issue with Common Resource

Tragedy of the commons

100

Overfishing is an example of what problem?

Tragedy of the commons

100

Herd Immunity is an example of what problem?

Free-rider problem

100

Bonus

Define the Coase Theorem

Assessing externalities

100

MSB<MPB

Negative consumption externality

100

MSB>MPB

Positive consumption externality

100

MSC<MPC

Negative production externality

100

MSC>MPC

Positive production externality

100

Bonus

What is an example of "internalizing" the externality?