The purpose of this assignment is to gain a deeper understanding of how externalities and public goods affect markets and the role the government may play in these markets

This assignment should help you understand how to identify positive, negative externalities and public goods in markets, discuss the problems in these markets and how the government can play a role in the solution of the market failure in these markets. This assignment should also help in the development of your written communication skills, including organization, presentation and analysis.

Knowledge: This assignment should help you develop a deeper understanding of how markets fail and why the government intervenes in some markets.

Task: Please answer BOTH of the following prompts in 250+ words total. Please be sure to include detailed explanations when answering the questions. One-sentence answers are not eligible for credit in this course. Grammar counts here so be sure to proofread and run spellcheck. Please number your answers.

Externalities:

1. Discuss an original example from your life of one negative or one positive externality that you have witnessed recently that has not already been used in the book or power points.

2. Who are the third parties affected by these externalities?

3. Why does the externality exist? Is there any possibility of eliminating the externality if it is an external cost?

4. How could government intervene to try to correct for the market failure in these cases?

AND

Public Goods/Common Resources:

1. What is the free-rider problem and what causes it? Give some ORIGINAL examples (ones that you come up with yourself that have not already been discussed in the power point or textbook) of public goods that are subject to the free-rider problem.

2. If we leave it to the private market to pay for public goods, what market outcome would you expect in regard to the examples of public goods that you cited above (i.e., would the good be overproduced or underproduced)?

3. Suggest one idea about how we can correct the problem of public goods?

4. Also, provide at least one original example/explanation of the Tragedy of the Commons.

Criteria for success:

1. Follow all instructions carefully.

2. Number your answers.

3. Write more than the minimum writing requirement of 250+ words. In total

4. Use complete sentences, professional language, correct grammar and run spell check. Proofread your work for errors and typos.

5. Avoid one-sentence answers, they do not count in this course.

6. Put in the maximum effort on the assignment: make sure your work is organized and well presented.

7. Cite any outside resources you use to complete this assignment.

8. The use of AI, including Grammarly is not allowed on this assignment and you will earn a score of zero if you are found to have used any outside resource and not cited it.

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