Suppose your neighbour cuts the lawn on Sunday mornings while you would enjoy quiet Sundays. This is an example of a negative externality, but if the neighbor values the activity at $30/week, and you value the quiet at $20/week, the efficient solution is for your neighbour to keep mowing.

1. In an economy with only two consumers and where the good can be provided at a constant marginal private and social cost, private purchases will provide the efficient amount of a pure public good.

2. If funded by progressive taxation, government provision of health care for for non-communicable diseases serves a redistributive function rather than an efficiency-enhancing function.

3. A system of tradeable emissions permits that ensures the optimal amount of emissions abatement also results in an efficient allocation of abatement across emission sources.

Answer rating: 100% (QA)

Suppose society consists of only two people namely you and your neighbor For efficiency ... View the full answer