Test

Question 1

Why irrational for consumer to use plastic bag

Answer 1

P1
- consumers dont focus of private benefit and no negative externality
E,g, environmental harm
-social cost > priv cost
- overconsumption, allocative inefficiency, info

Question 2

Unintended cost of using non-reusable plastic bags

Answer 2

Environmental damage:
-not biodegradable
-pollute oceans harming wildlife through ingestion
-also gov spends money on waste collection, funded by tax payers

Question 3

how does the incentive for using re usable cups decrease demand for single use

Answer 3

Point 1:
- firms offer discounts for reusable
- some charge extra for single
-consumer respond to this price change
-decrease in qd

-environmental damage changes this aswell