Question: 1. Explain what it means to internalize an externality. 2. List the means available to get market participants to internalize their externalities. 3. Describe how

1. Explain what it means to “internalize an externality.”
2. List the means available to get market participants to internalize their externalities.
3. Describe how a tax could remedy the overproduction of a good with a negative externality.
4. Describe how a subsidy could remedy the underproduction of a good with a positive externality.
5. State the Coase theorem.
6. Explain why the Coase theorem is significant.
7. List the problems associated with using government regulations to reduce negative externalities.

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