Chapter 12: Q.17 (page 297)
In a market without environmental regulations, will the supply curve for a firm account for private costs, external costs, both, or neither? Explain.
In a market without environmental regulations, the supply curve for a firm account for only the private cost.
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Is zero pollution an optimal goal? Why or why not?
Consider two ways of protecting elephants from poachers in African countries. In one approach, the government sets up enormous national parks that have sufficient habitat for elephants to thrive and forbids all local people to enter the parks or to injure either the elephants or their habitat in any way. In a second approach, the government sets up the national parks and designates villages around the edges of the park as official tourist centers that become places where tourists can stay and bases for guided tours inside the national park. Consider the different incentives of local villagers - who often are very poor - in each of these plans. Which plan seems more likely to help the elephant population?
What is an externality?
Technological innovations shift the production
possibility curve. Look at graph you sketched for
Exercise 12.13 Which types of technologies should
a country promote? Should “clean” technologies be
promoted over other technologies? Why or why not?
Suppose you want to put a dollar value on the external costs of carbon emissions from a power plant. What information or data would you obtain to measure the external [not social] cost?
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