In each of the following cases, determine whether a negative externality or positive externality is imposed and what an appropriate policy response would be.

a. Trees planted in urban areas improve air quality and lower summer temperatures.

b. Water-saving toilets reduce the need to pump water from rivers and aquifers. The cost of a gallon of water to homeowners is virtually zero.

c. Bottled drinks are packaged in plastic that does not decompose when discarded. As a result, they take up vast amounts of landfill space or must be burned, releasing pollutants.