For each of the examples below, answer the following questions: (a) Is there an

ID: 1179630 • Letter: F

Question

For each of the examples below, answer the following questions:

(a) Is there an externality? If so, describe it, including references to whether it is positive or

negative, and whether it is a consumption or production externality.

(b) If there is an externality, does it seem likely that private markets will arise that allow this

externality to be internalized?

1. Toxic waste production by firms

2. Research and development by a high-tech firm

3. Individual vaccination against communicable illness

1. it is negative production externality, yes private market will arise

2. no externality

3. +ve externality , consumption externality no , private market will not arise

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