Internalize an externality economics homework help

Short answers:

1. What 2 kinds of government policy can internalize an externality? Give an example of “Positive Externalities” for private goods. Which policy do you recommend in this case? Explain.

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2. What 2 kinds of government policy can internalize an externality? Give an example of “Negative Externalities” for private goods. Which policy do you recommend in this case? Explain.

3. Give an example of “Public Goods”. Explain how the non-exclusion and non-rival nature of it results in the “Free Rider Problem” that leads to a less-than-optimal supply of these goods from the private market.

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4. Give an example of “Common Resources”. Explain how the non-exculsion but rival nature of it results in overuse, so that there is a greater-than-optimal demand for these resources from the private market.

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