Explain the difference between a positive and negative externality.

REQUIRED Resources

Amacher, R., & Pate, J. (2013). Microeconomics principles and policies [Electronic version]. Retrieved from https://content.ashford.edu/

  • This text is a Constellation™ course digital materials (CDM) title.

Khnan, S. (n.d.). Fixed, variable, and marginal costs (Links to an external site.)Links to an external site. [Video file]. Retrieved from http://www.khanacademy.org/science/microeconomics/firm-economic-profit/average-costs-tutorial/v/fixed–variable–and-marginal-cost

Discussion 1

 

 Elasticity

Analyze the determinants of the price elasticity of demand and determine if each of the following products are elastic or inelastic:

  • Bottled water
  • Toothpaste
  • Cookie dough ice cream
  • Fresh green beans
  • Gasoline

In your analysis, please make sure to explain your reasoning and relate your answers to the characteristics of the determinants of the price elasticity of demand.

Discussion 2

 

Externalities

Explain the difference between a positive and negative externality. In your analysis, make sure to provide an example of each type of externality. Why does the government need to get involved with externalities to bring about market efficiency? What solutions need to be provided for your examples?

Guided Response: Review the discussion board posts of your classmates. What are some of the key differences between positive and negative externality? Respond to at least two of your classmates. Analyze the solutions your classmates offered and compare them to your own. Provide advice to your classmates’ solutions for making the market more efficient.