1: A privately owned power plant generates electricity. It uses coal, labor and capital as inputs and produces air pollution in the form of particulate matter (PM) and greenhouse gases. PM causes local health problem while greenhouses gases contribute to global climate change. All inputs as well as the air pollution and climate change are associated with costs. Which of these costs does the power plant take into account? How do you call the different type of costs?

2: Which type of resource are fish in the ocean? Please explain your answer.

3: The government wants to build a dam. The dam provides water for a city but it also stops salmon from migrating to their spawning grounds. The salmon population is expected to go extinct as a result. The government knows the benefits of the dam but not the environmental costs. What are the costs of extinction of the local salmon population and how can you assess them?

Answer rating: 100% (QA)

1 Power Plant Costs and Externalities Costs considered by the power plant Private costs These are the direct costs borne by the company such as Input ... View the full answer