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Negative Externality

1. Identify one or more negative externalities that have an affect on an individual. Could existing or proposed laws have prevented this from happening?"
2. What are public goods? Why these goods are not produced in the private sector?

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1. One negative externality is pollution. The firms pollute (air or water). This impacts individual and may cause serious health issues for individuals living in highly polluted areas. The existing laws have prevented this negative externality to some extent by imposing fines on companies that pollute too much and putting caps on the amount of pollution a company can generate. Thus by doing this, government is trying to internalize the externality.

2. In economics, a public good is a good that is non-rivaled and non-excludable. This means, respectively, that consumption of the good by one individual does not reduce availability of the good for ...

Solution Summary

The solution provides an excellent response to the question being asked. It goes into a considerable amount of detail and explains the concepts being asked very well. The response starts off by explaining the externalities that may impact an individual and then describes the concept of public goods very well.