Microeconomics 2

Sometimes market activities (production, buying, and selling) have unintended positive or negative effects outside the market’s scope. These are called externalities. As a policy maker concerned with correcting the effects of gases and particulates emitted by and local power plant, answer the following questions: 1. What 1 policy could you use to reduce the total amount of emissions? 2. Why do you think the policy would reduce the total amount of emissions? 3. What would be the benefits of each action (besides emissions reduction)? 4. What would be the costs of each action? 5. How would you decide what was the best level of emission reduction?

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