Micro 4

Question 1

Negative externalities of production

Answer 1

Where the social costs of producing a good are greater than the private costs of producing the good

Question 2

Trade pollution permits

Answer 2

Licenses which allow firms to pollute up to a certain amount. These permits can be bought and sold

Question 3

Regulation

Answer 3

Laws to address market failure and promote competition between firms

Question 4

Positive externalities of consumption

Answer 4

When the social benefits of consuming a good are larger than the private benefits of consuming that good.

Question 5

Free rider problem

Answer 5

People who do not pay for a public good still recieve benefits of that good.