Chapter 9 Practice

Chapter 9 Practice - Chapter 9: Repetition & Practice...

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Chapter 9: Repetition & Practice Questions
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Market Failure What is market failure? What are possible reasons of market failure? Hint: There are three of them.
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Externalities What are externalities? What are negative externalities? What are positive externalities?
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Negative Externalities Why do negative externalities lead to market failure??
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Negative Externalities
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Correcting for Negative Externalities What ways exist to correct for negative externalities?
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Correcting for Externalities Private Bargaining Government Regulation Taxation
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Correcting for Externalities Why might some ways to correct for externalities be more costly than others?
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Practice Question • Suppose firms A and B are each emitting 10  tons of waste into the atmosphere yearly.  Firm A can reduce emissions at a cost of  $200 a ton, but it costs firm B $500 a ton. a) How much would it cost society to reduce pollution by 10 
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Chapter 9 Practice - Chapter 9: Repetition & Practice...

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