What is a negative externality? Give an example of something…
What is a negative externality? Give an example of something with a negative externality and what that negative externality is. Does the externality arise from under- or over-production by the market? (2pts.) Using your example of a negative externality, explain why a tax or government regulation might help the economy to reach an efficient production point. (2pts) What is a positive externality? Give an example of something with a positive externality and what that positive externality is. Does the externality arise from under- or over-production by the market? (2pts.) Using your example of a positive externality, explain why a government subsidy might help the economy to reach an efficient production point. (2pts)