De Anza College Analyzing Negative Externalities Questions
1. ANALYZE NEGATIVE EXTERNALITIES:
- Does the free market provide solutions when negative externalities are present? Why or why not?
- Based on a real world example, analyze the pros and cons of different policy options that the government can utilize to correct a negative externality.
- In your opinion: demonstrate which property regime would be best suited to address the correction of a negative externality? Briefly explain why.
2. APPLY THE CONCEPT OF SUSTAINABILITY TO PRODUCTION:
- Define ‘food security’.
- Illustrate why the concepts of weak or strong sustainability are an important consideration in achieving food security?
- Provide an example.
3. ILLUSTRATE THE IMPORTANCE OF THE DISCOUNT RATE:
- What is the definition of the discount rate in environmental economics, what does it measure, and why is it important in the policy making process?
- Suppose it costs $1000 to plant a forest that can be harvested in 30 years. At that time, it will produce a value of $5000 worth of wood. Is this investment a good idea (assume a discount rate of 5%)?
- How does this analysis change with a discount rate of 6%?View keyboard shortcuts
