Question

1)If college education produces a positive externality, the government may

subsidize college education.

try to convert college education into a negative externality.

try to ignore college education.

try to recover each student's marginal social benefit from education.

tax education.

2)If a good incurs a negative externality, then the socially desirable output level can be reached by

increasing the supply of the good.

decreasing the supply of the good.

increasing the demand for the good

subsidizing the consumption of the good.

allowing the government to produce the good.

3)An example of an international negative externality is when

a Mexico City firm dumps hazardous chemicals into a local river.

a Midwest utility burns fuel that affects trees in upstate New York.

China uses copyright-protected, U.S.-made software.

a U.S. firm benefits from a Japanese firm's research.

a U.S. firm causes acid rain that falls in Canada.

Answer 1

1) If college education providespositive externalities , the government will subsidize the education. This means that students at the college will get aid and in certain cases they will also get free education, which is funded through taxation or charitable organisations..

2) Socially desirable output in this case can be achieved by decreasing the suppply of the good. The government in this case can tax goods which can increase the cost for production for the consumer and hence decrease the production and supply of the good.