Econ202 Assignment 4 The answers to these problems can be found in your textbook, but you may use your PowerPoint notes and online sources as well. Part 1: Provide the definitions of the following terms. 1 point each. Positive externality Corrective taxes Free rider Part 2: Answer the following questions. 3 points each. QI: Suppose there is a negative externality in the lemon market. How does the social cost of lemons compare to the private cost? How does the optimal quantity of lemons com pare to the market quantity? Q2: What does the Coase Theorem say about externalities? Q3: What is Cost-Benefit Analysis? Why is it hard to do? Q4: What are the 4 typs of goods? For each one, say whether they are excludable and whether they are rival in consumption. |