Problem_Set_2-Spring2014_SOLN

Problem_Set_2-Spring2014_SOLN

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Unformatted text preview: also showed that this result holds regardless of whether the externality is consumption-based or production-based. Demonstrate graphically that the opposite holds with a positive externality. Create TWO graphs that show that goods associated with a positive externality (one for a consumption and one for a production externality), the efficient quantity of exchange is higher than that which is determined by the market. Label each with an appropriate example (like we came up with in class). Consumption side – getting immunized Production side – growing organic produce 2) A Neighborhood Externality Erica grows garlic in her backyard organic garden and sells it at the Milwaukee Farmer's Market...
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This document was uploaded on 03/11/2014 for the course ECON 328 at Wisconsin Milwaukee.

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