Chapter 17

Describe three consumption activities that create external costs.

Describe three production activities that create external benefits.

Betty and Anna work at the same office in Philadelphia and they have to attend a meeting in Pittsburgh. They decide to drive to the out-of-town meeting together. Betty is a cigarette smoker and her marginal benefit from smoking a pack of cigarettes a day is $\mathrm{\$}40.$ Cigarettes are $\mathrm{\$}6$ a pack. Anna dislikes cigarette smoke, and her marginal benefit from a smoke-free environment is $\mathrm{\$}50$ a day. What is the outcome if a. Betty drives her car with Anna as a passenger? b. Anna drives her car with Betry as a passenger?

Wildlife trafficking and poaching are on the rise. According to CITFS, an estimated 25,000 elephants were poached across Africa in 2011 , and in South Africa alone 668 rhinos were killed by poachers in $2012.$ The resurgence of poaching is driven by the tremendous increase in the demand for ivory and other animal products and economic growth which means more money in the hands of consumers who are willing to pay for animal products. a. How are wildlife trafticking and poaching related to property rights? b. Can the tragedy of the commons in wildlife trafficking be curtailed by establishing property rights to the land and animals? c. How can 'bag limits' change the short-term outlook of hunters to a long- term outlook?